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When investors build their portfolios, they usually start with stocks and bonds. However, consider investing in more asset classes than just the traditional ones to create a diversified portfolio. The most successful investors allocate a portion of their investment portfolio to alternative investments, which can be very attractive for you too.
The reason is that alternative investments typically don’t correlate with the stock market. Besides, spreading capital across different investments helps reduce risk and portfolio volatility. Alternative investments often also serve as a hedge against inflation and have the potential to generate higher returns.
Therefore, this Yieldstreet review will focus on how to invest in alternative investments, which features are available, and the pricing structure you should expect. We will also look at who the platform is best for and how to get started.
on Yieldstreet’s website
Quick Summary: Yieldstreet is an online platform offering users alternative investment opportunities previously reserved only for institutions and the ultra-wealthy, including real estate, art and private business credit.
What Is Yieldstreet?
Yieldstreet is an online crowdfunding investment platform that offers a variety of asset-backed debt investments. These investments include real estate, consumer financing, art, and many more. This approach is very unique as most crowdfunding platforms focus on one asset class instead of providing access to many.
The company allows retail investors to join the ultra-wealthy and invest in asset classes that haven’t been available to them in the past. They also get access to diversification strategies typically used by institutional investors. All they need to get started on the platform is $2,500.
How Does Yieldstreet Work?
On the platform’s offerings marketplace, you will find various investment options that have gone through a rigorous selection process by Yieldstreet. All these investment opportunities come from originators who provide loans for projects that are backed by an asset.
Investment opportunities include a multi-asset class fund, short-term notes, single asset class offerings, and structured notes. Through these investments, you get access to many alternative investment assets, including:
- Legal finance
- Private business credit
- Real estate
How to Open a Yieldstreet Account
To invest on Yieldstreet, you need an investor account. Click on the “Sign Up” button on the homepage to get started. You can then take a short quiz about alternative investments and have the platform recommend suitable investments options or skip it altogether.
To create your investor account, enter your first and last name, email address, and password. You can also sign up with your Google or Apple account. Once your profile is completed, you can invest in the available offerings. However, only their new Prism fund is open to non-accredited investors. All other offerings require you to be accredited and meet specific criteria. To invest, you must have:
- $200,000 in annual income per year for the last two years ($300,000 with a spouse); or
- $1 million in net worth excluding your primary residence.
As Yielstreet provides alternative investments across multiple asset classes, there are many features investors should be aware of. From funds to real estate to art and IRA investing, you will find different options to choose from.
|Account Fees||0.00% to 2.50% annual management fee (*other fees may apply)|
|Account Types||Taxable, Traditional IRA and Roth IRA|
|Offering Types||Real estate, art, marine, legal, consumer finance, commercial finance, aviation and more.|
|Advertised Returns||10.65% net annualized IRR (2015-2022)|
|Mobile Apps||iOS and Android|
|Support||Phone (+1 844 943 5378) and Email ([email protected])|
Yieldstreet Prism Fund
The Yieldstreet Prism Fund is the only alternative investment open to non-accredited investors. Its primary goal is to generate income and achieve capital appreciation by allocating funds in income and cash flow-backed assets.
Investors pay 1.5% in annual fees, and the minimum investment is just $2,500. Expect a quarterly distribution at an annualized rate of 8%. However, cash distribution will be reinvested unless you opt-out of the DRIP.
Currently, the Yieldstreet Prism Fund diversifies the invested capital across these eight asset classes: real estate, corporates, consumer, commercial, legal finance, art, marine, and cash.
If you plan to diversify your retirement portfolio with alternative investments, the Yieldstreet IRA (YSIRA) might be for you. With this tax-efficient IRA, you have everything in one place. The setup process is quick and electronic transfers of funds from an outside IRA is relatively easy. You can choose between a Traditional IRA, Roth IRA, and converting existing IRAs. Rolling over your 401(k) is also possible.
What’s best is that you aren’t charged fees when making an investment or contributing to your account. In contrast to typical IRAs, the YSIRA has a flat annual account fee depending on your account balance. Up until $100,000, it’s $299; above $100,000 it’s $399.
>> Read Also: Percent Review: Invest In Private Debt
With Yieldstreet’s Short Term Notes, you can park $2,500 or more for less than six months and earn monthly interest payments at the annualized rate of up to 4%. This is massive compared to the market average, which usually pays less than 0.5%. Your principal will be paid back once the note matures.
There are no fees and no promotional rates. Yielstreet also offers rolling maturities, so you will always find a Short Term Note to invest in. Since 2019, about 30 deals have fully matured and each note has performed according to plan.
Yieldstreet’s innovative Structured Notes are a portfolio of three to ten notes covering tech, consumer, ESG, and diversified themes. The notes are issued as debt, but the results are tied to stock performance. Investors need to be accredited, invest at least $15,000, and pay a 1.25% annual management fee.
Each note portfolio pays a quarterly coupon, offering investors downside protection, regular income, and an improved portfolio risk-return profile. The expected return is between 7% and 12% per year. However, returns can vary, and notes can fall below its downside protection value due to the poor performance of the underlying stock, resulting in a principal loss.
Real Estate Investing
As an accredited investor, you can also invest in commercial, residential, and multipurpose real estate properties with Yieldstreet. You will earn returns either through equity investments or real estate-backed loans that generate income. If you are a non-accredited investor but want exposure to real estate as well, you need to invest in the Prism Fund.
On Yieldstreet, real estate investments typically have a short duration of just 12 to 48 months. Moreover, the company has invested $480M so far and earned $37M in interest. Just under 60 matured deals generated a historical Net Internal Rate of Return (IRR) of 9.64%.
An asset class that not many crowdfunding platforms feature is art. Yieldstreet offers a pool of blue-chip, mid-career, and emerging artists. This works by investing in fractional shares of physical art collections or in art-backed loans that generate income.
If you ever wanted to be an art investor but didn’t have the financial resources or the entire process was too complex, this might be your chance. Yieldstreet simplifies this process and you can join with as little as $10,000, expecting a net IRR of more than 12%.
Alternative Investment Portfolios
If you add alternative investments to your portfolio, it can be wise to distribute your capital across multiple asset classes. To give you a better understanding of how a potential alternative investment portfolio could look, Yieldstreet offers sample portfolios.
These sample portfolios focus either on income, growth, or turbo. Each portfolio explains its use, provides a possible asset class mix and shows the amount invested. For the income portfolio, you will see expected earnings over the next six months. In contrast, growth and turbo show the weighted target return. You will also see in which offerings these portfolios are invested and at what percentage.
Supply Chain Investing
If you invest in Supply Chain Financing, you are backing a private business financing program. This program allows you to earn money from loans that help global manufacturers and suppliers optimize their working capital. These loans help finance corporate, physical, and financial assets, such as commercial and consumer receivables, equipment, inventory, and other business assets.
There are two reasons why you can invest in these offerings. One is that these deals are too large for most finance companies to offer. The other is that Yieldstreet wants to provide a wide range of investment opportunities to retail investors.
Another compelling reason to invest with Yieldstreet is that its single offerings give you complete control over your alternative investment portfolio. These individual deals are either debt or equity investments and don’t have a fixed return profile. As of this writing, the company offers only one standalone investment in the real estate space.
In this case, the company provides details on the property itself, including highlights and essentials. Yieldstreet also displays annualized returns, investment terms, the overall offering size, how much funding is still possible, and the investment minimums of $10,000 for this deal. They are also transparent about returns, management fees, and the payment schedule.
Since its launch, Yieldstreet has funded more than $2.5B in alternative investments. They have fully repaid 175 deals and generated an Internal Rate of Return of 10.65% across all asset classes. According to their website, they have invested about $1.9B and their 320,000+ investors have earned more than $179M in interest.
These solid numbers show that the Yieldtreet team knows what they are doing. Moreover, such a strong performance highlights alternative investments’ power and why it makes sense to include them in your investment portfolio.
If you need a checking account to hold a cash balance for future investment allocations, try the Yieldstreet Wallet. Once funded, transactions will be instantaneous, letting you earn interest faster.
The high-interest checking account is held at Evolve Bank & Trust, an FDIC-insured bank (protection of up to $250,000 for individual accounts). The wallet generates 0.2% annual interest on funds held. You don’t need to be accredited to use this account and no minimum balance is required.
Yieldstreet Crypto Wallet
This is a new feature offered by Yieldstreet that allows users to deposit, store, and convert crypto (only Bitcoin and Ethereum at this point). When investors deposit BTC and ETH they can convert them into fiat and invest in Yieldstreet’s offering.
Users that deposit crypto into their account are also able to create a crypto wallet and use it to transfer funds from other exchanges or from other crypto wallets.
Yieldstreet Pricing and Fees
Yieldstreet collects an annual management fee that ranges from 0% to 2% for every loan. Short Term Notes are the one alternative investment that doesn’t carry annual fees. Nonetheless, these management fees are competitive with other platforms.
For every investment, the company transparently displays each fee on the deal page. These fees are paid from the generated cash flows (making your returns net of fees) and not by the investors.
Yieldstreet also charges investors an annual flat fee depending on the investment and loan structure. These fees range from $100 to $150 in the first year and drop to $30 and $70 in the subsequent years. However, they are deducted from your initial interest payments.
Yieldstreet is a regulated investment advisor with the SEC. Therefore, they are regulated and must comply with specific SEC rules and regulations. Moreover, the firm is audited every year by a third-party auditor. The findings are available to all current Yieldstreet investors.
Keep in mind that defaults happen because alternative investments target high-yield returns. Therefore, a borrower going into default is your primary risk. Other investment opportunities may be safer, but they also target lower returns.
Still, all investments on Yieldstreet are asset-backed, working to remind the borrower of their payment obligation and pursuing litigation where necessary.
Yieldstreet Customer Service
If you want to contact Yieldstreet, you can choose between giving them a call and sending an email to [email protected].
There is also a virtual assistant bot available on the platform. The Investor Relations team designed this bot to help you get an answer to your pressing questions. If you want to connect with an associate through the bot, you need a Yieldstreet account and will have to provide your login email address.
- Access to a mix of alternative investment opportunities is very unique
- A diversified alternative investment fund is available
- Platform is open to accredited and non-accredited investors
- Self-directed IRA Investing is supported
- Backing through assets provides some protection when defaults happen
- Various short-term investment options
- Fees are reasonable and very competitive
- Thorough selection and vetting process
- Low correlation to the stock market reduces risk
- Capital is locked up for multiple years
- Nearly all investments offerings require accreditation
- Limited single offerings
- Not suited for real estate investors as that’s not the company’s focus
- Yieldstreet offers high-risk investments that have a higher default-probability
- Self-directed IRAs must be opened with Yieldstreet as they aren’t compatible with other platforms and providers
Alternative investments are more than just real estate. The vast investment options on Yieldstreet clearly illustrate that. However, some investors may prefer investing with specialists that focus on one asset class instead of offering an entire basket.
Yieldstreet vs. Fundrise
If you want to deploy your capital on a real estate crowdfunding platform, Fundrise is a very popular choice. The reason is that the platform is open to accredited and non-accredited investors alike and allows you to invest in commercial and residential real estate portfolios.
Moreover, the entry-level portfolio already diversifies across multiple properties and requires a minimum investment of just $10. Once you outgrow the beginner stage, you can move on to four other account levels. They unlock additional features, such as IRA investing, a customized portfolio strategy, or access to private REITs. Plus, only the Premium account level requires a higher investment minimum above $10,000.
Ultimately, fees are similar to Yielstreet, with an annual advisory fee of 0.15% and an annual management fee of 0.85%. Read our full Fundrise review to learn more.
Yieldstreet vs. Masterworks
If you want to invest in fine art, you should consider Masterworks. The company identifies the artists with the most momentum and purchases their pieces at a reasonable price. They then securitize them so that investors can buy shares of iconic artworks with an investment horizon of up to ten years.
Once the holding period is over, Masterworks will sell the painting and distribute proceeds. You can also sell your shares earlier on the platform’s secondary market, which isn’t possible with Yieldstreet. All for an annual management fee of just 1.5%.
While Yieldstreet generated an IRR of 10.65% since its inception, Masterworks has an even better track record of 15% since its launch in 2019.
|Fees||0.00% to 2.50% annual management fee (*other fees may apply)||1.0% per year||$1.50% annually plus 20% at sale|
|Promotion||None||Advisory fee waived (*12 months)||None|
|Highlight||Access to multiple alternative investment opportunities||Access to private real estate deals||Invest in fine art and fractional shares of art|
|Best For||High net-worth individuals||Long term investors||Long term art investors|
Find out how Yieldstreet stacks up against the competition.
Who Is Yieldstreet Best For?
As alternative investments are very illiquid, the platform works in your favor if you don’t need your money for the foreseeable future.
Income investors could benefit from alternative investments. Again, the platform has multiple investment options that distribute cash quarterly or even monthly.
Yieldstreet Review FAQ
We have already covered all the important aspects of Yieldstreet’s offering. However, we understand that you might have additional questions. Below you find frequently asked questions and our answers.
Is Yieldstreet Safe?
The biggest risk with alternative investments on Yieldstreet is a loan default. Although these loans are short-term and backed by the underlying asset, there is no guarantee that the foreclose and liquidation bring in enough money to satisfy all investors. This means that you could lose money. However, potentially higher yields are there to compensate for this risk.
Is Yieldstreet FDIC-Insured?
Generally, investments in funds aren’t bank deposits which is why the FDIC doesn’t insure them. Unfortunately, that also counts for most investment opportunities on the platform. However, the Yielstreet Wallet is an FDIC-insured checking account. In addition, Yieldstreet’s Short Term Notes have been FDIC-insured since September 20, 2021.
Is Yieldstreet Only for Accredited Investors?
No, Yielstreet welcomes both accredited and non-accreditors on their platform. Nonetheless, most investment opportunities are only available to accredited investors. Since late 2020, non-accredited investors have had access to Yieldstreet’s Prism Fund and the Yielstreet Wallet Checking account.
How Does Yieldstreet Make Money?
Yieldstreet has various income streams. The company charges investors an annual management fee between which it collects from the cash flows. In addition, investors pay flat yearly fees, which are deducted from the initial interest payments. Moreover, loan originators may pay a listing fee.
How Often Do I Receive Payments with Yieldstreet?
You will typically receive monthly or quarterly payments according to predefined payment schedules. However, some investments distribute interest and principal based on specific events. The exact payment schedule is always displayed transparently on the offering’s page.
Does Yieldstreet Have an App?
Yes, there is an app available that works on both smartphones and tablets (iOS and Android). Yieldstreet is one of the very few crowdfunding platforms that offer a mobile application. As a mobile user, you also get the same functionality as web users.
In A Nutshell
- Minimum Investment: $2,500
- Fees: 0.00% to 2.50% annual management fee (*other fees may apply)
- Promotion: None
Many individual investors solely invest in stocks and bonds to generate returns from their investments. However, alternative investments are a legit way to diversify your portfolio and earn passive income as well.
Yieldstreet offers you the chance to invest in private debt investment opportunities that are usually reserved for the ultra-wealthy, hedge funds, and large institutions. Although most of the offerings are for accredited investors only, non-accredited investors get to invest in a diversified portfolio fund that consists of multiple alternative asset classes.
With a competitive pricing structure and low investment minimums, Yieldstreet can be an interesting choice for all investors.
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Carsten is a Freelance Copywriter with a personal interest in money management and investing. Besides taking care of his investments, he loves traveling, reading books, and working out (calisthenics & yoga).