Reddit reviews The 5 Mistakes Every Investor Makes and How to Avoid Them: Getting Investing Right

Since this is a Roth IRA I'd drop the bond component all together. Since a Roth IRA is tax advantaged, I'd put only the highest appreciation securities into the account. From most to least desirable to hold in a Roth account: emerging markets, small/mid cap, large cap, reits, treasury bonds, corporate bonds, municipal bonds. This is the concept of asset location. Google it and read about it you haven't. It's easy to implement as you build a portfolio over time.

For a Roth IRA, since you won't have to pay taxes at withdrawl (30+ years from now) you want the money you put into that account to grow as much as possible. Bonds will dampen that growth. You said "I feel that growth ETF's are better suited to me as they have greater risk" so it sounds like you understand you have a very long time horizon. That being said, if you're afraid the volatility of that account could scare you into selling an equity, then keep the bond component.

I like sector specific ETFs in moderation. I think you can take advantage of sector downturns (for example XLE or VDE for Energy sector right now) if your time horizon is long enough and you aren't afraid of the short term. You want to be careful about overexposing yourself to a particular sector from your other holdings though. Be greedy when others are fearful.

Instead of Small or Mid cap Growth vs. Value I prefer broader ETFs of just Small caps and Mid caps without making a distinction between growth or value. VB or SCHA for small cap? VO or SCHM for mid cap? With companies as "small" as small and mid cap companies I think it can be hard to tell which companies are undervalued or positioned for growth. So why not get broad exposure to all of them?

For my tastes your international allocation is too heavy since you get a healthy exposure to international from MGK. If you want a little extra exposure to international (but not emerging markets) you can look at an ETF like IEFA.

And last, I'd totally avoid messing around with commodities. Historically they tend to perform worse than keeping your money in your mattress.

And a great book to read: http://www.amazon.com/Mistakes-Every-Investor-Makes-Avoid/dp/1118929004

Hope that helps.

I pointed you to a book with plenty of proof from history.

The 5 Mistakes Every Investor Makes and How to Avoid them

> I am a 18M, looking to open up a Roth IRA.

yes... do it young. Start contributing now. Make compound interest work for you.

> I have zero clue on how I would go about opening this up,

You have a SSN, right? Just set up an account with TD Ameritrade. Be sure to follow up with them to make sure they characterize it as a Roth IRA. As others have pointed out, you're also going to need to be making income (and you'll pay taxes on that income up front when you squirrel it away in your Roth IRA account). As a side note for anyone starting early who isn't earning a lot, there's actually a tax credit if you contribute to your Roth IRA.

> a good starting point for different investments to put my money into.

The entire point of a Roth IRA is that it is tax protected, both principal and gains (the other big point is that you can't pull anything out of it beyond the principal funding of the account until you're 59.5 years of age). That means you should be overweight in whatever produces the best returns to the detriment of beta (alpha measures returns, beta measures volatility). Typically, most everyone is going to advise you to invest in an "index fund" and that's true, you should. However, an index fund uses something called "diversification" to lower your alpha exposure while increasing your investment's beta measure. In theory, this is supposed to moderate your loses when the equities markets go down (significantly). In reality, it's really doing nothing more than trying match the typical ~7% long-term return the equities markets have delivered over the decades... and that's fine, as long as you keep contributing (maxing the annual contribution limit) to your Roth IRA every year like clockwork.

> would be smarter, bonds, mutual funds, or stocks?

The conventional wisdom (before ZIRP took over) is 100 - your age = the percentage of your portfolio that should be in the equities market (so, if you're 18, 82% of your Roth IRA should be in the equites market at 18% should be in bonds). Lately, people who should be past the 50% market into bonds are finding that they have to participate in the equities market well beyond what has typical been advisable. I know... you're saying, "well, why does that matter to me; I'm young". You'll be competing with them when buy and hold stocks. Personally, I'd advise a lazy portfolio approach or a four fund portfolio, that way you have some involvement (periodic rebalancing) and a modest amount of control over your alpha and beta exposure.

Since you specifically mentioned "mutual funds", I'm going to suggest looking at Vanguard, as they pretty much pioneered the idea of the no-load or low cost mutual fund index (many mutual funds are what they call "front loaded", where you pay a bunch of money for the privileged of being in the fund).

Here's a link to get you started

You're entering a super complicated game for which you're not prepared. You need to start studying. For a short, easy to read, I suggest:

"The 5 Mistakes Every Investor Makes and How to Avoid Them"

You've already avoided one of the mistakes by deciding to start early, so maybe read up on the other four, eh?