The allocation of funds across different asset classes such as:
Stocks
Bonds
Foreign Stocks
Commodities
Real Estate
ETFs
Exchange Traded Funds (related to ETN, Exchange Traded Notes). Acts like both a mutual fund (pooled money) and a stock, price changes throughout the day and one can buy as little as 1 share. This makes it very easy to diversify.
Stocks - IVV - S&P 500 (500 of the largest American stocks).
Bonds - TLT - Long Term Treasuries (Some tax advantages)
Real Estate - VNQ - Typically in the form of REITs. REITs are Real Estate Investment Trusts and are something of a sector specific mutual fund already.
ETFs may be further diversified:
Stocks
Large Cap - S&P 500 (or Dow 30)
Mid Cap - IVOO - Already much better return in dividends than a savings account.