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Yieldstreet is an online crowdfunding platform where investors can diversify their portfolios in alternative asset classes ranging from marine projects to private equity deals for minimums of $500 to $10,000+.
With Yieldstreet, you’ll have the option to:
Earn passive income
Diversify your portfolio
Protect yourself against inflation
Invest in an array of alternative assets
Protect yourself against stock market volatility
Yieldstreet is one of the first companies to offer an assortment of non-traditional investment classes to both accredited and non-accredited investors.
But is it safe and legit?
Let’s take a deep dive into this Yieldstreet review and find out if it’s the best alternative investment platform for you.
What is Yieldstreet?
YieldStreet is an alternative investment platform that connects individual investors with private equity deals. To invest through YieldStreet, you must be an accredited investor. This means you have earned more than $200,000 per year over the last two years ($300,000 for couples) or have $1 million in net worth.
In most cases, YieldStreet invests in real estate deals such as hotels, industrial complexes, or student housing. But unlike many of the real estate funding sites, YieldStreet doesn’t limit itself to the physical real estate class. Investors can opt into fine art, ships or tankers, real estate debt, lawsuits settlements and other investment alternatives.
WHO IS YIELDSTREET BEST FOR?
Wondering if YieldStreet is the right fit for your portfolio? Review the points below to find out if you should buy in.
Yieldstreet is best for:
Investors looking to diversify their portfolio beyond stocks and bonds
Investors who want passive income
Anyone looking for asset-backed investments
Accredited and non-accredited investors alike
YIELDSTREET PROS & CONS
Pros:
Large range of alterative investments
Invest in assets not tied to the stock market
Opportunities for both non-accredited and accredited investors
$2,500 minimum investment for Prism Fund
Reasonable annual management fees
Traditional and Roth IRAs available
Cons:
Most investments are multi-year (except for short term notes)
High minimums for individual offerings
Limited number of open offers
Fees tend to be relatively high (ranging between 0% to 2.5% per year on assets held under Yieldstreet’s management)
Most offerings are available only to accredited investors
I should note that Yieldstreet’s strict vetting process allows for a higher potential return on your investment.
In fact, since the company’s first offering in 2015, Yieldstreet has reviewed over $34 billion worth of deals and closed on less than $3.1 billion.
These numbers mean that only about 9.29% of deals are closed by Yieldstreet.
WHAT IS THE MINIMUM INVESTMENT?
Yieldstreet has several offerings with different minimum investments. They are:
Prism Fund: $2,500
Short term notes: $2,500
Individual offerings: $10,000 – $50,000
Note that only the Prism Fund is available to everyone without accreditation requirements.
What Is Interesting About YieldStreet
In my opinion, it can be hard for any investor to untangle the marketing hype on a platform from the actual value of the investments offered. And to a certain extent, I think YieldStreet leans heavily on the hype of alternative investments. That said, YieldStreet does appear to offer two compelling value propositions.
Potential Returns: The most obvious value proposition is the potential for great returns. YieldStreet targets returns ranging from 8% to 20%, and it rejects over 90% of deals presented to the platform. While no company can guarantee performance, it seems like YieldStreet’s offering could yield very solid returns.
Low Correlation: The other thing that I found interesting about YieldStreet was the lack of correlation with the stock market. High correlation means that an investment moves up and down in price at the same time a stock market index (say the S&P 500) moves up and down. YieldStreet offers low correlation investments. That means the ups and downs of YieldStreet have not (to this point) correlated with the ups and downs of the stock market.
Yieldstreet Prism Fund: For non-accredited investors, you can invest in a fund that invests in the alternative assets.
Including low correlation investments in your portfolio can be a smart move. It smooths out the returns in your portfolio, and tends to lead to higher returns overall. Including “alternatives” (anything outside of stocks and bonds) in your portfolio can lead to higher overall returns. With esoteric offerings, YieldStreet truly qualifies as an alternative.
Yieldstreet Returns
A reason why Yieldstreet can be so appealing is because of the platform’s potential returns.
Yieldstreet’s average return is 9.71% and it offers target returns ranging up to 25%.
In this case, you can see that net annualized returns have steadily increased each quarter, climbing to 9.71%.
Of course, there is no such thing as a free lunch.
And in Yieldstreet’s case, to achieve these high potential returns, you must be willing to increase your investment risk.
Here are some investment risks you should be aware of:
High fees
Minimal liquidity
Little to no regulation
Borrowers that can’t repay your loan (default risk)
Unexpected industry fluctuations in value (market risk)
High returns mean high risks – and that can happen to anyone investing in anything.
Yieldstreet Investment Options
Here’s a closer look at what you can invest in through Yieldstreet.
Individual Offerings
Being able to directly invest in various alternative asset deals can be the most compelling reason to use Yieldstreet.
Investors can have more control of their portfolio when doing individual deals. The drawback is that there may only be a few available offerings and they may not necessarily be for the asset class you want to invest in. But the deals do change frequently so if you are patient you’ll likely find a deal that suits you.
Here are the asset classes that are available as individual offerings:
Real Estate
It’s possible to invest in individual real estate projects like single-family homes in Georgia or a multi-family project in Michigan. These offerings may make it easy to invest in a specific geographic area.
Another offering is the Real Estate Opportunity Fund that invests in a basket of commercial real estate with debt or equity financing.
These offerings can be similar to the best real estate crowdfunding sites that let you invest in individual deals or a managed portfolio.
Commercial
Investors can finance business deals and receive payment from future profits.
One example is supply chain financing, where the raised cash pays the suppliers. Investors receive the interest payment when the loan matures.
Legal
Investors can invest in legal offerings that may award the client an advance payment before receiving a legal settlement. Investors receive a portion of the final legal settlement.
In many cases, the legal funds have a basket of similar lawsuits and investors receive a small amount of each successful settlement.
Marine
Recent marine offerings may fund the scrapping of a retired shipping vessel or finance the acquisition of a new ship.
Aviation
An aviation fund lets investors earn profits from leasing commercial aircraft.
Art
Blue-chip art deals can also take place on Yieldstreet. These offers can earn a profit when another buys the collection at a higher price.
Short-Term Notes
Accredited investors wanting to park their cash for a short time and earn interest should consider the short-term notes. The investment term is three months and has no annual management fees.
A recent offering offers a 3% annualized yield that’s higher than most bank CDs or high-interest savings accounts. The minimum investment is $2,500.
IS YIELDSTREET WORTH IT?
For any investors looking to add some alternative investments to their portfolio, Yieldstreet offers an attractive opportunity that is unique from the competition.
There are several platforms out there that allow you to invest in institutional-quality real estate projects, but Yieldstreet is one of the few that really covers the full spectrum of the alternatives space – with offerings including art, litigation, and supply chain financing.
Furthermore, many smaller investors are excluded by platforms that are exclusively for accredited investors, making it difficult for retail investors to add diversified Alts to their portfolio.
Yieldstreet’s Prism Fund provides a unique solution to this dilemma, with a $2,500 minimum investment.
