Some wealthy investors diversify their investments by putting some of their money into alternative assets like collectibles. Some culturally significant collectibles have grown immensely in value over time, including certain highly sought-after sports cards and gaming cards.
But these assets often have price tags that don’t allow everyday people to own them while still leaving enough money left over to create a diversified investment mix. Otis Wealth aims to change that. Their platform lets you buy shares of contemporary art, collectibles, sneakers, and comic books for as little as a few dollars per share.
Keep reading this Otis Wealth review to find out how this innovative investment platform works and if it could be a smart fit for your financial goals
Buy and sell shares of contemporary art, sneakers, and collectibles.
- Sell your shares to other Otis members or receive pro-rata returns
- New drops added to the app weekly
- Free education to bring you up to speed
What is Otis Wealth?
Chief executive officer Michael Karnjanaprakorn, who also founded Skillshare, founded Otis Wealth in 2018. The company started offering investments in July 2019, with the goal of helping anyone to invest in high-end collectibles with cultural significance. In particular, Otis Wealth aims to help younger investors buy shares in items to which they feel a personal attachment.
Members of the platform can use the company’s iOS or Android app to purchase shares in new collectible offerings, called drops, or trade shares from past offerings on their Otis Wealth trading marketplace.
Otis Wealth sells shares in the collectibles on their site but they are not the broker-dealer for these assets. A broker-dealer is a company that buys and sells securities such as a brokerage firm. Instead, Otis manages the investments and works with the Dalmore Group, LLC, for broker-dealer services. When you invest with Otis Wealth, your money is actually going into the LLC created for each security. So even if Otis Wealth fails, you will continue to own the shares of the underlying asset in which you invested.
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|Best for...||Someone looking to invest in alternative assets with large price tags without owning the entire investment. Potentially a good fit for true fans of these cultural items.|
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What does Otis Wealth offer?
Instead of limiting yourself to investing money in stocks, mutual funds, or exchange-traded funds (ETFs) with the best brokerage accounts, you could invest in culturally significant collectibles with Otis Wealth. In the past, only the wealthy could invest in these types of high-end collectibles due to their often outrageous price tags.
Otis Wealth aims to make it so virtually anyone could choose to invest in these assets. They do this by acquiring assets, fractionalizing them into shares, and then offering those shares as equity investments to members of their platform.
Here is a sampling of the wide variety of investment options that Otis Wealth provides:
- Police Car by Banksy
- Greatest Hits, Three Cans of LaCroix, and Sneakers by Otis x fnnch
- Gone and Beyond by KAWS
- Dior x Air Jordan 1 Low
- Nike MAG
- The Nike x Artist Collection
- Daredevil #1
- X-Men #1
- Avengers #1
- 2011 Hermés Birkin 35 So Black handbag
- 1981 Joe Montana Rookie Card Topps Football #216 PSA 10
- 1999 Blastoise 1st Edition Holo #2 PSA 10 Pokémon card
- Super Mario Bros. 3 NES game cartridge
You can buy shares of each investment when they are initially offered, but you cannot purchase more than a 19.99% share. Shares vary in price by item and could be as low as $1.00 per share for some new drops. After the pre-sale closes, trading on shares of the asset generally opens up in about two to four weeks.
Otis Wealth also has a private VIP program for those with $10,000 or more invested on their platform. It offers early access, concierge support, and private drops. These private drops usually involve items purchased from a gallery and are only open to Otis Wealth’s most active investors. The minimum investment in these opportunities, should you get access to them, is $1,000.
Pros and cons of Otis Wealth
Otis Wealth has quite a few benefits that are difficult to find elsewhere. If you invest with Otis, you could:
- Own shares of pricey cultural collectibles you couldn’t afford otherwise
- Trade your collectible shares on Otis Wealth’s trading platform
- Possibly receive distributions if the asset earns income from being on loan
- Possibly receive profits if Otis Wealth sells the item at an increased price in the future
- See your assets in person at Otis Wealth’s dedicated gallery space in New York
The Otis Wealth platform isn’t perfect, though. Here are some drawbacks to be aware of:
- If the Otis Wealth trading platform stops operating or doesn’t have enough activity, you might not be able to sell your shares.
- You don’t decide when Otis sells the underlying assets associated with your shares. This means Otis could effectively end your investment.
- If Otis Wealth sells an asset for a profit, you might be subject to paying a higher capital gains tax rate on collectibles than other assets.
- You don’t get the benefit of having the collectibles in your home where you can enjoy them.
- Alternative assets may increase or drop in value rapidly depending on market conditions.
Who can open an account with Otis Wealth?
Otis Wealth has some basic requirements to open an account, but they are ones that most people could meet. You must:
- Be 18 years old or older
- Be a U.S. resident or citizen
- Have a bank account with a financial institution
- Have a mobile phone number and a plan with a carrier that operates in the U.S.
- Have a phone that supports their mobile app
Otis Wealth will also ask if you are an accredited investor when signing up for an account. Accredited investors have an annual income greater than $200,000 ($300,000 with a spouse) or a high net worth exceeding $1 million (excluding the value of your primary residence) and are considered sophisticated investors. Even so, investing with Otis is open to both accredited investors and non-accredited investors.
People who meet the above criteria and want to invest in alternative assets may find Otis Wealth a good fit for them. That said, some experts recommend alternative investments should only make up a small part of your portfolio, such as 10%, so you may want to consider your overall investing plan before you decide how much money to put into Otis.
How much can you earn with Otis Wealth?
Figuring out exactly how much a person could earn with their investments is impossible. All types of investing are risky. You could lose a significant portion of your investment at any time or you could earn decent returns. No one has a crystal ball to see what their investment returns will be in the coming years.
The alternative assets Otis Wealth allows you to invest in are even less predictable than other asset classes due to the many variables involved. These assets are less liquid, may get loaned out to earn income for shareholders, or may get sold if Otis Wealth accepts an offer they feel is fair.
Unfortunately, you don’t have any influence on generating income from loaning out assets. Otis Wealth doesn’t have to consult you before selling an asset, either. They state that they plan to hold assets for three to seven years on average, but that could change. This makes returns less predictable because you can’t choose to continue holding the investment if it decreases in value and Otis Wealth decides to sell.
Ultimately, your returns would be determined by the particular asset you invest in and how its value changes over time. Additionally, as with any investing platform, you also need to factor in the fees Otis Wealth charges.
FAQs about Otis Wealth
Is Otis Wealth a good investment?
Only you can determine if investing in a specific asset within the Otis Wealth portfolio is a good investment for you. Each person has unique personal finance goals when it comes to investing their money. Consider whether the asset might help you meet your investing goals and if the investment timelines Otis Wealth offers are acceptable before investing.
Is the Otis Wealth app legit?
Otis Wealth, Inc., is located on Madison Ave. in New York City and is a legitimate alternative asset investing service. While Otis Wealth isn’t a broker-dealer, they partner with Dalmore Group, LLC. Dalmore Group is a broker-dealer that is a registered member of FINRA and SIPC. Each asset is set up within an LLC in which you directly invest. Therefore, even if Otis Wealth goes out of business, you’ll still own your part of the asset.
How does Otis Wealth make money?
Otis Wealth charges a 0% to 10% sourcing fee on each investment they acquire. This fee is included in your upfront purchase of shares in a new drop. They also get to keep 10% of the profits when they sell an asset. Otis Wealth’s broker-dealer also earns a 1% fee on invested capital.
How to open an Otis Wealth account
You can sign up for an Otis Wealth account through their app and it only takes a few minutes.
Once you download their app, the sign-up process is fairly straightforward. They’ll request basic information such as your name, mobile number, birth date, address, and Social Security number to verify your identity. You must link a bank account to fund your Otis Wealth account, as well.
Otis Wealth will also ask about your financial situation to help identify suitable investments for you from their collection. This information includes your income, financial objectives, risk tolerance, and employment status.
Other investing platforms to consider
Some people might not want to invest in the type of assets Otis Wealth offers. After all, some of them seem like strange things to invest in. If you don’t think Otis Wealth fits your investment style, consider these alternatives.
Masterworks is another platform like Otis Wealth that allows you to buy shares in fine art paintings. The company was founded in 2017, so they’re a bit more established than Otis Wealth. Like Otis Wealth, they also offer a secondary trading marketplace to sell your shares if you want to sell your investment before the company sells the actual asset. Read our detailed Masterworks review to see if they’d be a smarter fit for you than Otis Wealth.
People looking to get into the stock market may want to check out one of the best investment apps, Stash. Stash allows you to invest in partial shares of stocks and ETFs starting with as little as $5. These more traditional investments usually make up a majority of most people’s portfolios. You can also get a Stock-BackⓇ debit card to earn an amount of stock with each purchase you make. Read our detailed Stash review to learn more.