Investors all have different goals and varying methods for achieving those goals. Similarly, investors typically have different tolerances for risk. To help spread out the risk, many investors diversify their portfolios by purchasing several assets rather than just a few.
Diversification can take the form of investing in different industries, such as banking and technology, or different asset classes, such as stocks and alternative assets. If you’re interested in diversifying part of your portfolio by investing in alternative investments, Yieldstreet has a few options you might want to consider.
Yieldstreet is an investing platform that has returned more than $164 million in passive income.
- Diversify your portfolio with alternative asset classes
- Investment minimums as low as $2,500
- Due diligence performed on all investment opportunities
What is Yieldstreet?
Yieldstreet was founded in 2015 by Milind Mehere and Michael Weisz. They created the company to help individual investors invest in alternative assets that only the top 1% used to have access to. These investments include individual offerings and short-term notes investing in fine art, aviation, commercial, consumer, legal, marine finance, and real estate investments as well as a multi-asset class fund option.
The company, headquartered in New York City, currently has more than 2.7 million individual investors, has funded over $1.6 billion in deals, and returned more than $900 million in principal and interest. Yieldstreet is regulated by the U.S. Securities and Exchange Commission (SEC).
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|Best for...||Accredited investors who want to invest a portion of their portfolio in alternative assets.|
What does Yieldstreet offer?
Yieldstreet opens up investments in alternative asset classes to more than just institutional and wealthy investors that have historically invested in these assets. The company has specialized teams that take a deep dive into potential investments to make sure they fit the company’s goals before offering them as investment options.
To give you an idea of how selective Yieldstreet is, the company has vetted $15 billion of deals but only $1.6 billion of them have passed their due diligence process. This process includes independently analyzing financial metrics and assumptions using an objective approach. Then, they carefully develop educational materials so investors can evaluate the investment and risks involved.
In particular, the company allows you to invest in one of three types of investments. These include the Yieldstreet Prism Fund, individual offerings, and short-term notes. It’s important to note that these investments do not guarantee liquidity. They’re designed to be held until maturity. And in some cases, investments may extend beyond the initially anticipated timeline.
Yieldstreet Prism Fund
The Yieldstreet Prism Fund is the only investment option available to all investors whether they’re accredited or not, but it requires a $2,500 minimum investment. The Fund manages the investments and invests in real estate debt, consumer finance, legal finance, art finance, corporate finance, commercial finance, and cash. The Fund aims to make quarterly distributions until it is terminated in March 2024, though distributions are not guaranteed. It charges total annual fees of 1.5%.
Individual investments with Yieldstreet
Accredited investors can choose individual investments they’d like to invest in. These investments have a minimum investment amount of at least $10,000 per investment and reach as high as a $25,000 minimum. Fees for these investments range from 1.25% to 2%, based on the current offerings publicly available on its website. Investments and goals vary by individual investment.
Short-term notes with Yieldstreet
The final category of investments Yieldstreet offers is a short-term notes option. This is essentially short-term debt. Its short-term notes investments require a $2,500 minimum and target a six-month term. The target annualized interest payments the investment intends to achieve is 4.5%. This fund does not have any management fees.
Alternative assets, as with any investment, come with risk. Carefully read the materials about each investment and learn about their projected investment time horizon. If you feel Yieldstreet is a good fit for your goals and risk tolerance, you can invest with Yieldstreet using its website, iOS, or Android app.
Pros and cons of Yieldstreet
Investing in Yieldstreet could be beneficial in some instances.
- It gives more people the ability to diversify their portfolios with alternative asset classes.
- Yieldstreet completes due diligence on potential investments before offering them to investors.
- Investments are focused on providing income to investors.
The company and its investments have some drawbacks, too.
- You must be an accredited investor to invest in individual offerings and short-term notes.
- Minimum investments of $2,500, $10,000, or more (depending on the investment) may be prohibitive while staying properly diversified.
- Investments are illiquid and cannot be sold at any time.
- Fees charged are often higher than low-cost investment options.
Who can open an account with Yieldstreet?
U.S. citizens with a valid employer identification number (EIN), taxpayer identification number (TIN), or Social Security number (SSN), with a U.S. bank account and U.S. mailing address can sign up for Yieldstreet account. Certain people that are not U.S. citizens who live and work in the U.S. may also be eligible to invest. Nebraska and North Dakota residents are not allowed to invest at this time.
If you’re just starting out and learning how to invest money, Yieldstreet might not be the best platform for you. Investors need a $2,500 minimum to invest in the Yieldstreet Prism Fund. However, most assets on the platform require accredited investor status. These investments require a $2,500 minimum investment in short-term notes or a $10,000 minimum investment for individual offerings.
An accredited investor is a person with a net worth of more than $1 million, excluding the value of their primary residence. Alternatively, you can qualify for accredited investor status by having an income of $200,000 as a single person or $300,000 combined with your spouse for each of the past two years. You must expect to earn the same income level in the current year. Financial professionals with any of the following licenses also qualify:
- Series 7
- Series 65
- Series 82
Yieldstreet is best for accredited investors that can access all of Yieldstreet’s investment options and want to diversify beyond traditional stock market investments. It’s also likely best for investors with a diversified, large portfolio, so their investment in alternative assets through Yieldstreet aligns with their risk tolerance. Investors’ investment horizons should also align with the asset’s maturity date. The investment options Yieldstreet offers are not generally liquid or easily sellable, as stocks or mutual funds can be.
How much can you earn with Yieldstreet?
Yieldstreet claims to have an 8.6% internal rate of return (IRR) on all matured investments weighted by the investment size. This covers the period starting July 1, 2015, through July 18, 2022, and includes deductions for management fees and other expenses.
Despite this claim, it’s essential to realize that all investments come with the risk of loss. Although this is Yieldstreet’s overall IRR, individual investments may have performed better or worse. In a different period, similar investments could have much different rates of return and even potentially decrease in value. Carefully consider what assets you’re investing in, your timeline for investing, and risk tolerance to help figure out an estimate of the returns you might expect.
FAQs about Yieldstreet
Is Yieldstreet legit?
Yieldstreet, founded in 2015, is a legitimate company that allows people who qualify to invest in alternative assets. The company is a 506(c) SEC-regulated entity and a registered investment advisor. The financial statements for its offerings are audited annually, as well.
Is Yieldstreet only for accredited investors?
Yieldstreet offers investment opportunities for both non-accredited investors and accredited investors. Non-accredited investors can choose to invest in the Yieldstreet Prism Fund, which has a $2,500 minimum investment. You must be an accredited investor to invest in Yieldstreet’s individual offerings, which require at least a $10,000 minimum investment; or its short-term notes, which require at least a $2,500 minimum investment.
Is Yieldstreet FDIC insured?
Your Yieldstreet Wallet, a savings account, is Federal Deposit Insurance Corp.-insured because funds in it are held at Evolve Bank & Trust, an FDIC-insured bank. This provides up to $250,000 of FDIC insurance for an individually owned account. All other funds in investments or outside of the Yieldstreet Wallet are not FDIC insured.
How much money do you need to be an accredited investor?
You can qualify as an accredited investor in several ways. One way is having a net worth of over $1 million, excluding the value of your primary residence. This requirement is the same whether you’re single or married. You can also qualify based on your income. You must have an annual income of $200,000 as a single person or $300,000 combined with your spouse for each of the previous two years with the expectation to earn the same in the current year. People with financial professional licenses Series 7, 65, or 82 also qualify.
How to open a Yieldstreet account
If you want to open an account on Yieldstreet, it isn’t too difficult, but Yieldstreet doesn’t state how long it takes. First, you answer a handful of questions about your financial status and experience with alternative investments. Then, you enter your contact information to sign up for an account.
You must provide a photo of your government-issued ID to verify your identity, link a bank account to fund your investments or your Yieldstreet Wallet, and confirm your accreditation if you want access to accredited investor-only investment options. You can verify your accredited investor status through a third-party agent, such as a certified public accountant, licensed attorney, an SEC- and FINRA-licensed broker-dealer, or certain investment advisors. Alternatively, you can provide documentation such as W-2s, tax returns, bank statements, asset statements, and a credit report to verify your status.
Other investing platforms to consider
Yieldstreet may not be the perfect fit for everyone learning how to invest money or those who want to invest in alternative investments.
If you’d rather invest in cars, trading cards, watches, memorabilia, and other collectibles, consider Rally Rd. This investment platform allows you to invest in shares of these assets. The collectibles are housed at its New York City office and some of them are displayed in its showroom.
Read our Rally Rd. review to learn more.
People looking to invest solely in commercial real estate for their alternative investment assets may want to consider a crowdfunding platform like DiversyFund. DiversyFund doesn’t require you to be an accredited investor and requires only a $500 minimum investment to start investing in its commercial multifamily property real estate investment trusts (REITs). The company doesn’t charge an investment advisory fee but receives some of the profits when a REIT gets liquidated.
Find out whether DiversyFund may be a good fit for you by reading our DiversyFund review.
Alternative assets as a whole may not be a good fit for you at your current point in your investing journey. You can check out our list of the best investment apps and our list of the best brokerage accounts if this is the case for you.
- Access investments typically reserved for the ultra-wealthy
- Build passive income with alternative assets
- Investment minimums as low as $500
- Typically low stock market correlation