Vanguard is raising the minimum amounts needed to open individual retirement accounts and custodial accounts for minors for the first time in 10 years.
The minimum investment required for a Vanguard IRA and custodial account is being tripled, from $1,000 to $3,000, while the minimum needed for a Vanguard Education Savings Account is being doubled, from $1,000 to $2,000. An exception to the increases is the Vanguard STAR fund, popular among IRA owners and entry-level investors. Its minimum will stay at $ 1, 000.
"It's unfortunate, to say the least, that one of the best-run mutual fund companies in the country is pricing itself out of the market for middle-income investors," Barbara Roper, director of investor protection at the Consumer Federation of America, told Phillyburbs.com.
Vanguard spokesman John Demming said the company simply wants to standardize its minimum investments at the $3,000 level, which applies to most of its products. But some industry observers believe the higher minimums are a way for the company to reduce the expenses that go along with servicing small investors.