BTW one problem with the picture books/readers, is she looks at the pictures instead of the words and thinks she's reading. That and her memorization skills seem to work against actual reading skills. She still young, so that will get ironed out in time and I'm not overly concerned. Heck her reading level is much higher than mine was at 5 years old, since my parents never thought to teach me to read instead letting the first grade teacher handle that. And they were both teachers, go figure.

Worry not. What you're doing is just right, and that's how it's done. There will be memorization, and then suddenly they start to work it out, and they start picking out the words for the first time. My daughter's first "read" word was odd. I was driving down the road with her in her little seat, and she starts shouting "NO!" I go "What? What?"

"NO! NO!" I've got no idea what's going on. Then she points at the signs along the road: "No Parking."

Both my kids picked up reading early without any formal training at home. But every kid is different, and will pick it up at different ages. Some will need more help. But no matter what, it can't hurt to read to them a LOT.