YieldStreet is an alternative investment platform designed to give accredited investors somewhere to put their money other than the stock market. The company was founded in 2015 by CEO Milind Mehere.
Traditionally, investing has been reserved for wealthy individuals. But with YieldStreet, you can get started with as little as $5,000. This YieldStreet review will explain a bit more about how YieldStreet works so you can decide whether it’s a suitable option for you.
What is YieldStreet, and how does it work?
YieldStreet is a lending platform that provides alternative asset-based investments. These alternative investments include asset classes such as real estate, fine art portfolios, commercial finance, and litigation finance. And these investments don’t rely on what’s going on with the stock market.
Getting started with YieldStreet is pretty straightforward, but you need to meet two main requirements. You must be an accredited investor and have at least $5,000 to invest. If you meet these two requirements, you can get set up on YieldStreet’s platform.
YieldStreet follows a five-point investment policy which states that:
- Investments must be asset-based
- There is a low stock market correlation
- All asset managers are highly experienced
- The debt is short-term
- YieldStreet aims to offer returns between 8-15%
Once you’re signed up, you can view all the available investments on YieldStreet’s website. These investment opportunities do close quickly, so you need to act fast if you see something you want to invest in.
Who is YieldStreet best for?
YieldStreet is best for accredited investors who have a minimum of $5,000 to invest and want to diversify their portfolios with alternative investments across multiple asset classes. To be an accredited investor, you must have made at least $200,000 in income over the last two years.
You also need at least $1 million in assets, not including your home. This puts the company out of reach for many people.
YieldStreet is best for a savvy investor who can do proper due diligence and analyze the strengths and weaknesses of various loans. YieldStreet does outline some of the risks involved with each investment, but ultimately, the burden falls on you to educate yourself.
Who should avoid YieldStreet?
If you aren’t an accredited investor or don’t have $5,000 to invest, then YieldStreet is not for you. But even if you do meet these criteria, there’s a chance YieldStreet isn’t the right choice for you.
YieldStreet is best for investors who can take the initiative to evaluate risk and choose investments on their own. If you feel you might need some guidance, then this probably isn’t the right choice for you.
Pros and Cons of Using YieldStreet
There are many advantages to using YieldStreet, but it’s not going to be the right option for everyone. Listed below are some of the biggest pros and cons of using the platform.
Pros
- It’s easy to get started: Assuming you meet the minimum requirements, it’s easy to open your account and get started with YieldStreet. And you don’t have to start investing right away. You can take some time to get comfortable with the platform and get a sense of the different investment options.
- High-yield investments: Once you’re ready to start investing, it’s easy to select your investments. And each investment targets yields between 8-20%. These are returns any investor would find it easy to get excited about.
- Transparent investments: YieldStreet is very transparent about each of its investment opportunities. You can see an overview of the investment, the terms, the individuals involved, and any other factors you should consider.
- An alternative to investing in the stock market: If you’re looking for a way to diversify your investments outside of Wall Street, YieldStreet could be a great option for you. When you sign up with YieldStreet, none of your investments will be tied too closely to what the stock market is doing.
- Regular payouts: The frequency of payouts will depend on each individual investment. Some investments will be paid out monthly or quarterly, while others will be paid out once cases in the portfolio settle.
Cons
- You must be an accredited investor: If you aren’t an accredited investor, you don’t have the option to invest with YieldStreet.
- Minimum investment of $5,000: YieldStreet requires a minimum investment of $5,000 to get started. This is much less than what other investments might require, but it will be out of reach for the average person.
- Limited investment opportunities: YieldStreet alternative investment options can be great, but these options are also far more limited and fill up quickly. You need to be willing to check the platform often for new investment opportunities.
- Communication is lacking: Some YieldStreet customers have complained that the company struggles with communication regarding payouts. The company doesn’t always let you know when you can expect payouts. Instead, payouts tend to just show up in your account with no advance warning.
- Unproven business model: YieldStreet has been doing well and has paid out high returns so far. But it can’t be overlooked that the company started in 2015 and hasn’t yet experienced an economic downturn. It is unclear how the company will perform on a long-term basis.
And while YieldStreet is upfront about what goes into each investment opportunity, there is always a certain amount of risk involved. And if you aren’t comfortable evaluating these risks on your own, YieldStreet probably isn’t the best option for you.
YieldStreet Fees and Charges
YieldStreet applies several fees to its investment services. A listing fee is charged to loan originators as a flat rate, while a management fee ranging from 1-4% is applied to cover operational costs such as sourcing and managing investments. These fees may appear modest initially but can accumulate over time, impacting your overall returns.
Evaluating YieldStreet as an Investment Option
All investments carry risk, and YieldStreet is no different. However, the platform claims its average investor sees an annual return exceeding 12%. Additionally, the company rejects over 90% of loan applications that fail to meet its stringent criteria, reflecting a thorough vetting process.
Transparency is another key feature of YieldStreet. Investors can review detailed information about each opportunity, making it easier to make informed decisions. The platform also allows for diversification across multiple asset classes and sectors, which can help mitigate risks. Furthermore, investments are insured by the FDIC up to $250,000, adding an extra layer of security.
That said, investing through YieldStreet is not without risks. Returns are not guaranteed, and there’s always a chance of losing money. As with any investment, it’s crucial to conduct your research and determine if this platform aligns with your financial goals and risk tolerance.
Frequently Asked Questions
How do I open an account with YieldStreet?
To open an account with YieldStreet you’ll follow the company’s simple three-step process:
- First, you’ll verify your identity by providing a government-issued photo ID.
- Then you’ll verify that you’re an accredited investor by submitting the proper documentation.
- And finally, you’ll fully fund your YieldStreet account.
What documentation is required to prove I’m an accredited investor?
To prove that you’re an accredited investor, you can provide the following documents. These documents must show that your net worth is over $1 million, and they must be dated sometime within the past three months.
- Bank statements
- Statement from your brokerage accounts
- Titles from any investment properties you own
- Tax filings
- An up-to-date credit report
Documents that are seriously outdated will not be accepted. And you’ll need to update this information on an annual basis.
What kind of investments does YieldStreet offer?
YieldStreet provides access to alternative investments in the following areas:
- Commercial and residential real estate
- Commercial and residential finance
- Art finance
- Marine finance
- Litigation finance
Investors will receive quarterly updates on all of their active investments. You’ll receive an email once investment updates become available in your portfolio.
How often will I receive payments on my investments?
The payment schedule depends on the types of investments you have. Many are paid out on a monthly or quarterly basis, but this can vary.
When you sign up for a new investment account through YieldStreet, you will receive an anticipated payment schedule. However, this is an estimate, not a guarantee. There may be extenuating circumstances that delay payments on certain investments.
Summary
YieldStreet is a viable option for accredited investors who are looking for ways to invest their money in commercial or multifamily real estate, art, or marine assets. You will need a minimum investment of at least $5,000 and a $1 million net worth to get started, so the platform isn’t a practical option for brand-new investors.
The biggest benefit of investing in YieldStreet is that the company is very transparent about all of its investment opportunities, which makes it easy to do your due diligence before you invest. Plus, every asset targets high returns, and the company has a strong track record so far.
However, YieldStreet was founded just four years ago and has yet to go through a recession. There is no perfect investment opportunity, but the stock market has a model that’s been proven over time. It’s unclear whether YieldStreet is a viable long-term business model.
