If you have UTMA accounts setup for your kids, this is a great way to starting them down a great path to investing!

@Aaron – Fund expenses can be changed at any time, but you will be informed of these changes when you receive your monthly/quarterly/semi-annual/annual reports. Some fund companies list the expenses on the statement while others will have them in the fund literature that is required to be distributed to you periodically.

As for the question of a for profit versus not for profit, it’s irrelevant. Even non-profit companies must make some kind of a profit. The better distinction for my money is private versus public and the way in which fund managers are compensated (long-term or short-term performance). In the case of American Funds, they have one of the best compensation mechanisms in the industry as they parse their portfolios among a number of portfolio managers that only handle a certain number of dollars within a fund. In addition, they compensate their managers based on long-term performance compared to others that do it on quarterly and one-year returns. This is a big difference and one of the key reasons they didn’t get sucked into the tech bubble or chased real estate like other fund companies.

As to moving money later, Schwab funds are a little more painful to transfer out because many custodians (the company/brokerage holding your funds) are not able to hold these funds. Ultimately, you should be able to find what you need at Schwab, Vanguard, Fidelity, T. Rowe, etc. A transfer of assets of retirement accounts triggers no tax consequence if it’s done properly, but if one custodian cannot hold a fund (Schwab Fund X, for example), you will need to liquidate it prior to transfer. A TOA (transfer of assets) will take anywhere from a week to several weeks depending on when the old company transfers to the new company. Also, a TOA usually carries a fee of some sort. The most common I’ve seen is between $50 and $100.

One last thing, if you don’t have an adequate emergency fund, you can either (1) save in a cash account or (2) open a Roth IRA and invest in cash. IRAs often have annual maintenance fees so option 1 is usually better. I point this out because often we miss this important step in our eagerness to get busy with retirement. Having an emergency fund is critically important because if you do have an emergency and don’t have the cash available, reaching into retirement account can be expensive as a result of taxes and penalties in addition to the ongoing fees charged to custody the assets…not to mention the market risks inherent with stocks.

Hopefully this is helpful.

Also Schwab is nice because once you invest the initial $100 the minimums after that are only $1.

Seems I can get started for less @ Schwab. Is there any way to change companies once I meet the minimums @ Vanguard? Even though their fees are a bit higher, it looks like the really lower rates @ Schwab can be expired at anytime. That makes me a little nervous. Plus, since Schwab is a for profit company, it would be really easy for them to take a loss on the index funds and make up for it by pushing really high cost stuff. Perhaps this makes sense. Or, is it stupid since I assume I would take a tax hit of some sort by changing companies. Sorry for asking stupid questions. =)