Yieldstreet offers alternative investments, like art and real estate, to those with plenty of cash to investFebruary 17, 2021
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- Yieldstreet is best for investors with above-average incomes who don’t have millions to invest.
- Yieldstreet was only available to accredited investors but most US investors can use its Prism Fund.
- The app’s alternative products carry unique risks. It’s crucial to understand them before investing.
- Click here to open an account with Yieldstreet »
Updated on 2/17/2021: We updated this review with a new section on Yieldstreet’s Better Business Bureau rating and reputation as a company. We’re currently adding information on trustworthiness to all of Personal Finance Insider’s reviews.
Is Yieldstreet right for you?
Yieldstreet is best for high net worth individuals looking to invest beyond what they can do with a typical brokerage. It is opening up to investors who don’t meet the SEC accreditation minimums, but it’s still offering speculative investment opportunities that carry significant risk. If the $5,000 minimum would represent more than 5% to 10% of your investments, you should probably hold off on investing with Yieldstreet for now.
One big drawback of the Yieldstreet Prism Fund is the fees, which while not horrible are still 1.5% per year, which is a decent chunk of your return. If this could go down to a flat 1%, it would be more in line with competitors. Another downside is some history of losses. The diversified portfolio of the Prism Fund should help offset the risk of losses, but it’s still possible.
Bottom line: High income or high net worth investors who don’t have six figures to invest with private equity firms or hedge funds and are willing to take on more risk for a higher potential return are the best fit for investing with Yieldstreet.
|Editor’s rating||3.75 out of 5|
|Fees||1% to 2% for Prism Fund; other investments start at 0%|
|Account Minimum||Varies; typically $5,000-10,000|
|Promotion||None at this time|
Yieldstreet pros and cons
- Access to alternative investments, including art, real estate, and legal settlements, that allow investors with plenty of assets to further diversify their portfolios
- Investors receive regular interest payouts over the life of the loan
- Higher-risk investments — best for those with a large amount of money to invest; limited investments available
- Fees may be higher than other types of investment accounts; Yieldstreet IRA accounts cost $299 to $399 per year
- Investments are highly illiquid
How does Yieldstreet compare to other investment platforms?
3.75 out of 5
4.5 out of 5
3.5 out of 5
Varies; typically $5,000-10,000
1% to 2% for Prism Fund; other investments start at 0%
1% – 2.75%
|Open an Account||Open an Account||Open an Account|
Is alternative investing right for you?
Investing in alternatives comes with unique risks. For example, it is possible that a borrower will default on their loan, meaning you could lose your principal investment (though Yieldstreet says it would pursue legal action in these cases). Yieldstreet has some measures in place to protect its investors — such as collateral-backed financing — but it is possible that you might not get your principal investment back or see returns.
In exchange for this higher risk, Yieldstreet investments may lead to higher returns. That’s why the platform makes sense for those with growing wealth looking to diversify. If you’re starting from scratch as a new investor, there are better places for you to invest that come with less risk, such as low-cost index funds and exchange-traded funds.
If you have a growing pile of cash that’s burning a hole in your pocket, Yieldstreet is worth considering, especially if there’s no chance you’ll need your cash in the immediate future since it will be tied up in illiquid assets.
Ways to invest with Yieldstreet
Direct investments: accredited investors only
Accredited investors can make direct investments in alternatives with their Yieldstreet account. As of this writing, open investments included a multi-family real estate portfolio in Brooklyn and a 180-day loan to a Yieldstreet subsidiary.
Past options include real estate investments in locations across the US, projects relating to oil tankers and large cargo shipping vessels, and a portfolio of post-war and pop art. Most investments show a positive return, but Yieldstreet is clear that some investments have not worked out well in the past.
Like any other alternative investment, it’s important to understand the risks and decide if it makes sense for your investment goals.
Prism Fund: open to any investor
If you want to take a more diverse, general approach to your alternative investments, the Prism Fund could be a better fit. This fund is newly open to any investor in the US (except residents of Nebraska and North Dakota). You don’t have to be an accredited investor to buy into this fund.
While Prism Fund works like a mutual fund in many ways, there are some important differences. Your investment is not highly liquid. That means you can’t just sell your shares if you need the cash for something else. If you invest in this fund, it’s important to understand that your funds are tied up for a number of years outside of planned quarterly distributions at a 7% annualized rate and limited distribution windows.
The fund charges a 1% annual fee, which is roughly in line with many actively managed stock funds, as well as an administration fee of up to 0.5%. There is a $5,000 minimum investment.
This is a closed-end fund that plans to shut down in March 2024. At that point, all assets will be sold and profits will be distributed to investors, who may also have an opportunity to roll their proceeds into a future Prism Fund offering.
Yieldstreet Wallet: FDIC-insured savings
Yieldstreet Wallet is a savings account held at Evolve Bank & Trust. This is an FDIC-insured savings account, but as of this writing, the interest rate is very, very low. Yieldstreet Wallet accounts are typically used to fund investments through Yieldstreet, including IRAs. More on that in the next section.
If you have a Yieldstreet Wallet, you are eligible for a self-directed IRA through Yieldstreet that comes with “checkbook control.” That means you can buy and sell a range of alternative assets, including an investment in the Prism Fund, through a Yieldstreet IRA.
Depending on your annual deposit rate, you’ll pay $299 to $399 per year for this type of account unless you transfer in a balance of $250,000 or more. In that case, your IRA is free.
Is Yieldstreet trustworthy?
Yieldstreet has received an A+ rating with the Better Business Bureau. The BBB uses a grade range of A+ to F when evaluating companies, so this shows that Yieldstreet stands out when it comes to customer interaction.
However, the BBB also says on its website that ratings don’t guarantee whether a company will be reliable or perform well. For this reason, it’s important to do additional research when determining whether or not to use an investment app.
In 2020, Yieldstreet picked up a class-action lawsuit after multiple investors reported that they lost over $100 million in alternative investment products. The investment app claimed that it wasn’t at fault.
BBB data shows that Yieldstreet closed two customer complaints in the last 12 months.
What is Yieldstreet?
Yieldstreet is an online investing platform that crowdfunds loans. It offers a suite of alternative investment products that includes real estate, shipping vessels, legal settlements, art, and financial instruments.
Until recently, Yieldstreet was only available to accredited investors (typically people with a lot of cash to invest), but the Yieldstreet Prism Fund, a managed fund of alternative assets, opened up to investors of all backgrounds on August 17.
The SEC defines an accredited investor as someone who has a net worth of at least $1 million excluding their primary residence or someone who has earned at least $200,000 per year (or $300,000 including a spouse) for the prior two years and expects the same income level going forward.
Yieldstreet was founded in 2014 and is based in New York City. In 2019, Yieldstreet was the fastest-growing financial services company in the Inc. 500 list and ranked 14 overall.
To date, Yieldstreet investors have invested $376 million in real estate, $246 million in marine finance, $95 million in art, and $408 million in other asset classes.
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