people say "diversify" and what they usually mean is "put your money in Industry A, Industry B, and Industry C." or, financial instrument A, B, and C.
my perspective is you should allocate resources for short-term vs long-term growth. and you should broaden "investment" to include personal as well as asset-based decisions.
short term investments
long term investments
on passive income
the opening statement of Kadavy's short "10 Passive Income Ideas" offers the best "passive income" definition i've found:
Some people misunderstand passive income. They think it means you earn money without working. What it really means is that you shift the moment when you provide value to a time when you aren't working.
taking this a step further, truly passive income is achieved by acquiring a project that returns passive income for the founder/maker. startup costs like spinning up a website, creating content, experimenting with marketing channels, and finding an audience become their problem, and you get it all for free.
in this sense you're simply paying for revenue, in advance. so long as the project doesn't tank, it's quite literally free money after paying back the principal. i did this recently, buying an affiliate account that grosses ~$13,000 per year and requires zero maintenance. i paid for the revenue up front, using leverage (financing), and within 3 weeks i was cash flow positive.
cash is King
this is something accountants get right. all the planning and strategy and spreadsheets and coding chops in the world won't help if you can't pay rent and eat steak.
the short term (asset) tactics above are designed to achieve your monthly burn (lifestyle) requirements, and the personal short term investments will help you achieve peak performance with which to develop long-term assets.