Yieldstreet Review: Alternative Investments

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What Is Yieldstreet? Explained

Yieldstreet is an online investment platform that allows you to make investments in various assets ranging from art to real estate. It starts investing at a relatively lower rate as compared to other platforms enabling users with average incomes to invest in some high-dollar markets other than the traditional ones such as stocks and bonds.

Yieldstreet Review – Features

Below are some of the features of Yieldstreet reviews you should know:

1. Minimum Investment

The company says the minimum investment is typically 10,000 USD, but that can vary by offer. Some past deals have set investment minimums high as 60,000 USD.

For the Prism Fund and Yieldstreet’s short-term notes offerings, the minimum investment begins at 500 USD.

2. Investments Offers

Yieldstreet focuses on securing debt investments across a variety of real estate, marine, art, commercial loan, and litigation deals.

Each investment offer is featured on the company’s website with important details, including the total offering size, minimum and maximum investment accepted, duration, and expected annual investment return.

Yieldstreet also details why the company likes the investment, the expenses, risks (and how it is attempting to mitigate those risks), and the expected time schedule for repayments.

3. Asset-based Investments

All offerings on Yieldstreet are backed by an underlying asset such as real estate, marine vessels, or a legal settlement, which gives the company a way to potentially recoup defaulted loans.  Still, the return on your investment is not guaranteed, and all investments involve risk, including the possibility of losing your principal investment.

4. Fees

Yieldstreet collects an annual management fee that ranges from 0% to 2.5% on average. Yieldstreet may also charge the originator a listing fee.

Some types of investments may also carry a flat annual fee that ranges from 100 USD to 150 USD in the first year, and 30 USD to 70 USD each subsequent year, depending on the structure of the deal.

These expenses are deducted from initial interest payments. These fees are disclosed on the individual offering pages.

5. Most Offerings for Accredited Investors only

Most investment deals on Yieldstreet are available only to accredited investors.

The Securities and Exchange Commission defines these investors as those with a net worth of more than $1 million (not including the value of a primary residence).

And those with annual income in each of the last two years of at least $200,000 for individuals or $300,000 for a couple.

6. Fund for nonaccredited Investors

In 2020, Yieldstreet launched its Prism Fund, a fixed-income portfolio across five asset classes: art, commercial, legal, private business credit, real estate, and corporate preferred bonds.

The fund pays quarterly distributions set at an annualized rate of 8%, the company says. Investors will pay up to 1.5% in annual fees for the fund.

The fund’s termination date is March 2024, but the company notes that liquidation of fund assets may take up to an additional 12 months.

7. Offers a Self-directed IRA

You can invest in Yieldstreet through a self-directed IRA. The IRA must be set up through Yieldstreet, which uses IRA Services as the custodian broker. You can also invest with a trust, LLC, or a solo 401(k) that is set up as a trust or LLC.

8. Illiquid Investments

Once you commit to a Yieldstreet opportunity, the investment can’t be redeemed for the duration of the offering, which can extend beyond the planned “target duration,” Yieldstreet notes.

So once your money is in, you’re committed to seeing the investment through.

9. Limited Availability of Investments

Each deal is open for investment for a limited period of time on a first-come, first-served basis, so you may walk away empty-handed, even if you come to the site ready to invest.

Yieldstreet fees

The fees charged by Yieldstreet vary depending on the specific investment opportunity, underlying asset class, and exact nature of these individual deals, but the below information should help you understand its pricing structure.

Management fees

Generally, Yieldstreet charges an annual management fee that ranges from 1% to 3% per investment and is deducted from the net returns of the account.

Origination fees

Yieldstreet charges an origination fee for each investment opportunity, which is typically a percentage of the investment amount. This fee covers the cost of due diligence, legal work, and other expenses associated with creating the investment.

Performance fees

Yieldstreet may also charge performance fees on certain investments, which are typically a percentage of the profits earned from the investment. These fees are only charged if the investment performs well and earns a profit.

Custodial fees

Yieldstreet partners with a third-party custodian to hold and manage investor funds. This custodian may charge fees for their services, which are typically a percentage of the invested amount.

For this reason, I advise potential investors to carefully review the exact fees associated with each investment opportunity prior to deciding on whether to invest. Fortunately, Yieldstreet is fully transparent when it comes to its costs and pricing. All the information regarding fees and expenses associated with each investment opportunity is clearly stated and in plain sight.

In conclusion, whilst it may be fair to say that the management fees charged by Yieldstreet are a little higher when compared to other brokers, I feel that they are not excessive. Especially when you consider that this annual management fee is for a carefully selected product from a well-regarded company with a good track record of delivering investor returns and beating the stock market.

YieldStreet Pros & Cons

Pros

• Mix of assets: Beyond real estate, other assets (such as legal, aviation, art, and marine) may make the platform even more appealing to investors wanting to diversify.
• Low minimum investment: YieldStreet has recently begun to provide alternatives with smaller $500 minimums, aimed at non-accredited investors or those looking for a safe haven for their uninvested funds.
• Short-term choices: Many of the loans on its platform are for less than two years, which is much less than other platforms that target real estate projects that take three to five years — or more. YieldStreet might be a good option for you if you’re wanting to diversify your portfolio with additional short-term investments.
• Reasonable fees: Most of its products have costs ranging from 0% to 2%, which is cheaper than many other platforms. Depending on the structure, certain of its fund alternatives have greater costs.
• Diversified fund options: YieldStreet has started offering more diversified fund options over the past year.

Cons

• Most offerings are only open to accredited investors: If you have less than $1 million in net worth and/or earn less than $200,000 per year, you can’t invest in most YieldStreet deals.
• Mix of assets: YieldStreet might not be the best place for investors looking for crowdfunded real estate deals, given its diversification into other asset classes.
• Higher-risk loans: While collateral like art, real estate, and marine vessels back YieldStreet’s loans, they’re riskier debt investments with a higher likelihood of default.
• IRA limitations: If you want to use a self-directed IRA (SDIRA), you have to create a new one that you can only invest through YieldStreet. This could result in paying more fees if you want to use your SDIRA for other investments as well, as you’ll need more than one. Most other platforms work with multiple third-party IRA custodians.

Top 5 Reasons Why You Should Choose Yieldstreet

1. It provides access to alternative investments so if you would like to invest in non-mainstream initiatives such as art, real estate, and legal settlements, you would get quite the variety.
2. Yieldstreet allows you to invest in assets that are not tied to the stock market, thus allowing you the opportunity to invest without the risk of a stock market collapse.
3. Can everyone invest in Yieldstreet? Yes, both accredited and non-accredited investors can use Yieldstreet to invest. For Prism Fund, the minimum investment is a paltry $500.
4. With an average annual management fee and the availability of traditional as well as Roth IRAs(Individual Retirement Accounts), Yieldstreet is a multi-faceted option that is a must-try.
5. Over the life of the investment, you will receive regular interest payouts via Yieldstreet.

Is Yieldstreet Right for you?

Yieldstreet offers individual investors an opportunity to invest in privately structured credit deals, offerings usually reserved for hedge funds and institutional investors.

A rule of thumb is to invest no more than 10% of your portfolio in alternative investments such as the ones Yieldstreet offers.

It’s generally considered wise to focus the bulk of your portfolio on index funds or mutual funds, which give you broad and diversified exposure to the stock market.

Yieldstreet Wallet

The Yieldstreet Wallet is an in-house digital wallet and savings account designed to help customers manage their funds and track their investments from one place. Savings held in the account are held by the Evolve Bank & Trust, and as such are FDIC-insured. With my Yieldstreet Wallet I was able to take advantage of the following features:

• Secure Storage

The Wallet provides secure storage for investors’ funds and investments, with two-factor authentication and encryption.

• Fund Management

Investors can easily manage their funds in the Yieldstreet Wallet, including adding or withdrawing funds.

• Investment Tracking

Investors can track their investments in real-time, with detailed information on each investment opportunity, including returns, maturity dates, and other relevant information.

• Transaction History

Investors can view their transaction history and account statements within the Yieldstreet Wallet.

• Integration with Auto Invest

Yieldstreet Wallet is integrated with Yieldstreet’s Auto Invest feature, allowing investors to manage their investments and investment criteria in one place.

• Yieldstreet IRA Integration

Tailor-made for investors with a Yieldstreet IRA. With this useful feature, I was able to manage my IRA account using the Yieldstreet Wallet.

Is YieldStreet Legitimate?

The founders and management executives of YieldStreet are well-known names in the alternative finance and technology industries. The company also has a large credit facility from notable investors like George Soros, and it just signed an agreement with Citi (NYSE: C), which stated it will utilize the YieldStreet platform to invest $2 billion for its wealthier customers over the next few years. It was also allegedly considering the potential of forming a special purpose acquisition company (SPAC) to either go public or co-sponsor to generate more cash at the time of this assessment.

Investors have put approximately $1.3 billion into YieldStreet in total. Through mid-2021, the platform has delivered almost $750 million in capital to investors, including nearly $140 million in interest, for a net IRR of 11.54 percent. So yes, YieldStreet appears to be the real deal.

However, YieldStreet investors have had some unfortunate luck in the past, as borrowers have defaulted on their loans. Loans related to vessel deconstruction had a noteworthy default, as the borrower deceived YieldStreet and other investors. The firm was probed by the SEC and the FBI, and investors filed a class-action lawsuit. YieldStreet filed a lawsuit against the borrower and was awarded a $77 million judgment, allowing it to seize assets to repay the loans, so all funds were eventually returned to investors. While this isn’t necessarily Yield Street’s fault, it’s important to understand there is always risk involved.

Top 9 Features Of Yieldstreet You Must Know

Following are the top 9 features of Yieldstreet:

1. Minimum Investment Amount
2. Asset-based investment
3. Fees
4. Who gets to invest?
5. Prism Fund
6. Type Of Investment
7. Self-Directed IRA
8. Commitment
9. Limited Investments

1. Minimum Investment Amount

According to the company, the minimum investment ranges around $10,000. The minimum investment for the short-term notes offered from Yieldstreet and Prism Fund is $500.

2. Asset-Based Investment

Asset-based investments enable you to invest without significant losses or risks as the offerings on Yieldstreet are backed by some underlying assets such as houses and so on.

3. Fees

The annual management fee ranges from 0% to 2.5% usually. There might also be a listing fee.

4. Who Gets To Invest?

Although most offerings are for accredited investors who have a net worth of $1 million, non-accredited investors will also get a few deals.

5. Prism Fund

The Prism Fund investment allows non-accredited investors on Yieldstreet the possibility to invest with a minimum of $500. It pays annual fees of up to 1.5% for the fund.

6. Type Of Investment

Yieldstreet provides an opportunity for alternative investments over a wide range of fields such as marine, art, real estate, litigation settlements, and even commercial loans. In addition, Yieldstreet provides information about the reasons why the company appreciates the investment, the costs, the dangers (and how it is working to reduce those risks), and the anticipated return schedule.

7. Self-Directed IRA

You can invest in Yieldstreet via a self-directed IRA which uses IRA Services as the major custodian broker.

8. Commitment

Yieldstreet makes sure that once you sign up for an investment, you cannot chicken out and leave it midway.

9. Limited Investments

Every investment deal on the site is available only for a limited period of time. It offers first come first service investments, so there are chances that you may miss the deal even if you are ready to invest.

Ways to Invest with Yieldstreet

These are some of the ways to invest with Yieldstreet:

1. 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.

2. 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.

Read Further

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 500 USD 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.

3. 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.

4. IRA Accounts

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 USD to 399 USD per year for this type of account unless you transfer a balance of 250,000 USD or more.

In that case, your IRA is free.

Yieldstreet: deposit and withdrawal process

Deposit funds

Once your account is verified and accredited, you can add funds to your account using a bank transfer or wire transfer. To add funds to your Yieldstreet account, follow these steps:

1. Log in to your Yieldstreet account.
2. Click the “Add Funds” button, located in the top right corner of the page.
3. Select the product that you wish to fund.
4. Choose the funding source you want to use, such as a bank transfer or credit card.
5. Enter the amount you want to invest and follow the instructions to complete the transaction.

Withdraw funds

The process for withdrawing funds from your account is just as easy. To withdraw money simply follow the below steps:

1. Log in to your Yieldstreet account.
2. Click on the “Withdraw Funds” button, the top right corner of the page.
3. Select the investment from which you wish to withdraw funds.
4. Choose the withdrawal method you want to use, such as bank transfer or check.
5. Enter the amount you want to withdraw and follow the instructions to complete the transaction.

What is The Minimum Investment for YieldStreet?

Minimum investments with YieldStreet can be as little as $10,000, depending on the form of the contract. Borrower Payment Dependent Notes are debt obligations to YieldStreet that are legally designed to be independent and bankruptcy-resistant (meaning investors are protected from losses related to a YieldStreet bankruptcy).

The minimums may be greater for Special Purpose Vehicles, which are organized as distinct LLC subsidiaries of YieldStreet owned by its investors and so are also bankruptcy-remote companies. Aside from the variation in investment minimums, each structure has its own set of fees detailed below.

In addition to those two loan kinds, YieldStreet has begun to provide diversified fund and short-term note alternatives with reduced investment minimums. The minimum investment in both the Prism Fund and the Short Term Notes is only $500.

Yieldstreet Research

To help ensure its customers are able to make informed investment decisions, Yieldstreet offers a few research tools to both accredited investors and non accredited investors. I found these to be especially useful as the world of alternative investment and alternative assets is one most traders are not familiar with. For this reason, I think these tools, though perhaps a little limited, will prove invaluable.

As part of its investment offering, Yieldstreet provides detailed information about each investment opportunity, including the investment type, target return, investment term, and risk profile. This is for all of Yieldstreet’s offerings and is a great way to quickly evaluate the opportunity.

For customers on the go, Yieldstreet’s mobile app provides investors with real-time updates on their investment portfolio, including performance data and investment details. Investors can also access Yieldstreet’s research materials through the app.

Yieldstreet also hosts webinars on various investment topics. These are designed to help investors learn more about different investment types, alternative assets, market trends, and strategies for investing. There is a strong online community on the Yieldstreet Forum sharing investment opportunities and insights with Yieldstreet’s investment team, and other investors.

Is YieldStreet Safe to Invest with?

The most significant risk associated with YieldStreet investments is a borrower’s failure to repay the loan. Your investment is organized as distinct legal companies with you and other investors as the owner of the debt in each investment. It is a bankruptcy-remote from both YieldStreet and the originator who delivers the loan to YieldStreet to sell on the platform.

YieldStreet loans are short-term, pay a high yield, and are secured by real estate, art, or a marine vessel. Suppose the borrower fails on the loan and is unable to repay it or negotiate an acceptable deal. In that case, the asset is foreclosed, and there are no assurances that it will be sold at a high enough price to satisfy all creditors. This might result in you losing money, especially if the loan you invest in is junior to the asset’s other obligations.

YieldStreet’s asset-backed loans are less risky than some other investing alternatives, but they aren’t totally 100% risk-free. Because the return compensates investors for the risk they are incurring by lending their cash to the borrower, it delivers greater yields than most other alternative passive income options.

Borrowers have defaulted on their loans in the past, although most loans have been returned on schedule, or YieldStreet has been able to work out a recovery plan. As previously reported, a borrower attempted to mislead YieldStreet and other investors on several loans related to vessel deconstruction. YieldStreet won this lawsuit, but it may not always recoup these assets, especially if the assets used to secure the loan lose value during a downturn in the economy.

However, as long as the economy keeps chugging along, the potential returns on this sort of short-term debt should continue to outweigh the risks of default, especially if you diversify your capital over different loans and asset classes. If the current macroeconomic environment takes a turn for the worse, the danger of defaults increases dramatically. Keep this in mind, and invest in accordance with your risk appetite.

4 Best Ways to Invest with Yieldstreet In 2023

The following are the 4 best ways to invest with Yieldstreet in 2023:

1. Yieldstreet Prism Fund Reviews
2. Via Self-Directed IRA
3. Direct Investment
4. Yieldstreet Wallet

1. Yieldstreet Prism Fund Reviews

The non-accredited investors will find it simple to invest on Yieldstreet via the Prism Fund. You can invest in alternatives like real estate, fine art, and so on, outside of the stock market, but at just $500 as the minimum investment required.

2. Via Self-Directed IRA

You can invest in Yieldstreet via a self-directed IRA. Yieldstreet actually helps you set up an IRA account through which you can use IRA Services as the major custodian broker to make investments.

3. Direct Investment

Only applicable for accredited investors who can take higher risks.

4. Yieldstreet Wallet

The FDIC-insured savings account held for Yieldstreet at Evolve Bank & Trust ensures that investors can get back good returns at extremely low rates of interest.

How To Open An Account At Yieldstreet? [2023]

Follow the steps given below to open an account with Yieldstreet:

1. Verification of identity: Click a picture of your US-issued Government ID so that all four corners of the ID are visible clearly. Upload this identity proof.

2. Link bank: Link at least one ACH-compatible bank to withdraw and distribute funds as and when needed.

3. Verify accreditation: This step is only for the accredited investors who will be joining Yieldstreet. You can verify your accreditation via a third party (financial advisor, lawyer, etc.), income, or net worth.

Is Yieldstreet FDIC insured?