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Yieldstreet

4.3

Lending

Earn Passive Income with Alternative Investments!

Looking for a Yieldstreet review to help you decide if it's the right investment platform for your needs?

Investing in an alternative asset is one of the easiest ways to diversify your portfolio and go beyond stocks and bonds. However, alternative asset investing is complicated for most retail investors because the risk-return profile of non-traditional instruments is hard to analyze.

Yieldstreet is on a mission to solve that.

It’s an alternative investment platform that simplifies and streamlines the process to make alternative investing as accessible as possible, to all.

But how does Yieldstreet work?
What are the costs, pros and cons, and the potential returns involved?

In this detailed Yieldstreet review we will walk you through what the investment platform offers, how to get started, its annual returns, and much more.

Investment risk

Low

Min investment

$1,000

Target return

8% - 15%

Fees

1%

Investment type

Asset-backed debt investments

Sectors

Diversified

Annual Fee

0-2% annual management fee for direct investments. For Prism Fund investments, there’s a 1% annual management fee and an administrative fee of up to 0.5%.

Annual Returns

Potential returns vary based on the investment opportunity you choose. Yieldstreet targets returns of 5-15% on all opportunities offered on the platform.

Average Liquidity‎

The investments offered on Yieldstreet’s platform are illiquid.

Open to investors outside the US

While foreign investors can invest in Yieldstreet, they must have a US based address and US based bank account.

pros

  • Yieldstreet has managed over $1.5B of investments with over $650M returned as principal and interest payment

  • Most opportunities on Yieldstreet aren’t strongly correlated with market trends - helping you insulate yourself from stock market fluctuations

  • Every investment opportunity is thoroughly screened

  • Most of the listed investment opportunities are short term to medium term - helping you earn returns relatively soon

  • Can invest in a collection of alternative asset classes with a self-directed IRA

  • Mobile and tablet apps for iOS and Android

cons

  • While there are multiple types of investments available, the volume of opportunities is low (around 5 a month) and sell out quickly

  • Direct investment opportunities are not available to nonaccredited investors

  • The investments offered on the Yieldstreet platform are illiquid

  • Need to have a US based address and bank account to invest

Best for

  • Accredited investors looking to diversify their portfolio

  • Investors looking for moderately quick returns that can generate potentially high yields

  • Non accredited investors looking to invest in a fund that can diversify their portfolio and generate passive income

What is Yieldstreet?

Yieldstreet is a crowdfunding alternative investment platform that helps you invest in a wide range of asset based investments.

Founded by Milind Mehere (CEO) and Michael Weisz (president) in 2014 and based in New York, Yieldstreet has managed over $1.5B in investments with $650M returned as principal and interest. Their Net IRR (internal rate of return) is 12.44%.

Unlike most other crowdfunding platforms that focus on a particular type of asset class (such as commercial real estate or litigation financing), Yieldstreet offers a variety of asset-backed debt investments.

These investment options include (but aren’t limited to):

  • Real estate investment loans
  • Accounts receivable financing
  • Fine art
  • Marine finance
  • Loans backed by artwork
  • Litigation finance
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Who should use Yieldstreet?

Yieldstreet is an ideal investment platform for:

  • Accredited investors looking to diversify their portfolio by directly investing in a range of alternative investments
  • Investors looking to generate moderately quick returns from their investment strategy (most of the opportunities listed on Yieldstreet are short to medium term debt investments)
  • Non accredited investors looking to invest in a fund that can diversify their portfolio and generate passive income

How does Yieldstreet work?

There are two primary investment options on Yieldstreet:

A. Direct investments - only open to accredited investors. These are investors with a net worth of at least $1,000,000 (not including the value of their primary residence) or investors who have an annual income of $200,000 for the last two years)

B. Prism Fund investments - open to any individual investor in the US (except residents of Nebraska and North Dakota) with a $5,000 minimum investment

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Here’s how both work:

A. Direct investments

  1. Originators (borrowers) post opportunities on Yieldstreet’s platform. Yieldstreet then carefully analyzes each opportunity before making it available to an investor.
  2. A Yieldstreet investor can then go through the platform looking for a deal or asset class that interests them - such as fine art, real estate, marine finance etc.
  3.  A Yieldstreet investor is essentially lending money to these borrowers and makes a return on the yield paid by the borrower.
  4.  Yieldstreet charges a fee to manage the loan, collect payments and distribute the yield back to the investors.

B. Prism Fund

The Prism fund works similar to mutual funds and hedge funds where investors pool their money into a fund.

The only difference here is that unlike a mutual fund, your investment in the Prism Fund is largely illiquid - limiting your ability to quickly sell your shares. The fund expects to pay out quarterly distributions at a 7% annualized rate.

As of September 16, 2020, the weighted average yield of the Fund’s assets - excluding cash and cash equivalents was 9.29%

The fund plans to close in March 2024 - when all the assets will be sold and the profits will be distributed to investors.

Yieldstreet features

Here are the key features of Yieldstreet:

1. Wide variety of investment opportunities

Unlike most other crowdfunding investment platforms that focus on a specific type of investment or asset class, Yieldstreet offers investors a number of different asset backed debt investment opportunities. These can range from fine art to litigation finance - helping the investor easily diversify their portfolio.

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2. Thoroughly screened opportunities

Yieldstreet executives carefully analyze each investment opportunity before making it available to investors.

As a result of this due diligence, over 90% of the asset opportunities presented to Yieldstreet are rejected - ensuring that every Yieldstreet investor only gets to invest in a pre-vetted investment offering.

3. Two primary Yieldstreet investment opportunities

Yieldstreet offers separate investment opportunities to cater to both accredited and nonaccredited investors.

An accredited investor can directly invest in asset backed debt investment opportunities and a non accredited investor can invest in a collection of alternative asset classes through the Prism Fund.

4. Supports investing via IRAs through Yieldstreet Wallet

Yieldstreet Wallet is an FDIC insured savings account held at Evolve Bank & Trust.

Signing up for this allows you to invest in a self-directed IRA via your Yieldstreet Wallet account. This allows you to invest in a range of alternative assets on Yieldstreet - including the Prism Fund.

Note: Depending on the amount of your annual deposit, your annual fee is $299-$399. However, if you transfer in a balance of $250,000 or more, your Yieldstreet IRA is free.

How to get started with Yieldstreet

Here’s how you get started with Yieldstreet:

1.   Go to Yieldstreet’s website and create your account for free.

2.  Verify your identity by providing a photo of your government ID.

3.  Link your bank account. You can also choose to connect your bank account to Yieldstreet Wallet to fund your Yieldstreet investment.

4.  If you are an accredited investor, you will have to submit documents confirming this.

5.  Once you finish signing up, direct investors can expect to see around 5 offerings a month. Once you find an investment offering that you wish to invest in, click on it, enter your desired investment account and click “invest.”

6.  You’ll be redirected to a confirmation page where you finalize the Yieldstreet deal by choosing how you want to pay - via bank account, wire transfer or your Yieldstreet wallet.

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Yieldstreet fees

For direct investors:
Yieldstreet charges an annual management fee that varies depending on the type of alternative assets you choose to invest in. This ranges from 0-2%.

You will also be responsible for an flat annual expense that’s taken out of your interest distributions. This ranges from $30-$150 depending on the legal structure of the loan.

For investors in the Yieldstreet Prism Fund:
Yieldstreet charges a 1% annual fee and an annual administrative fee of up to 0.5%.

Yieldstreet Potential Returns

Potential returns are highly dependent on the alternative assets you choose. However, Yieldstreet targets annual returns of 5-15% on all listed investment opportunities.

As the offerings on Yieldstreet are debt instruments, the investors act as lenders on the platform. Investors earn returns based on the yield paid by the borrower once they repay the loan at the specified interest rate.

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Yieldstreet Historical Performance

Due to the variety of investment opportunities offered, historical performance can vary based on the type of Yieldstreet investment you choose.

However, Yieldstreet has generated a 12.44% IRR from direct investments on their platform with their Prism Fund generating a yield of 9.29% - excluding cash and cash equivalents as of September 16, 2020.

As of the end of 2019, more than 100 of the 150 fully-completed loans offered on the platform had at least fully returned capital to investors.

Additionally, investments in Yieldstreet are on the rise - with Yieldstreet ranked the fastest-growing financial services company in the Inc 500 list in 2019.

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Pros and Cons of Yieldstreet

Here are the advantages and disadvantages of investing through Yieldstreet:

Pros

  • Most of the offerings on Yieldstreet don’t correlate with market trends - helping you insulate yourself from market fluctuations to a degree.
  • Supports investing in an alternative investment with a tax-deferred retirement account like a self-directed IRA.
  • Gives non accredited investors the opportunity to invest in a collection of alternative asset classes that can generate passive income via the Prism Fund.
  • Every Yieldstreet offering is thoroughly screened before becoming available to investors.
  • Most opportunities are short to medium term. This way, investors don’t have to wait too long for returns on their alternative investment.
  • The Yieldstreet platform is also accessible via their mobile and tablet apps for iOS and Android.

Cons

  • While there are a variety of different types of investments available, the volume of investment options is still relatively low with just five deals presented to you in a month.
  • The direct investment opportunities aren’t available to non accredited investors.
  • The investments offered on the Yieldstreet platform are illiquid.
  • Investors need to have a US based address and bank account to invest in a Yieldstreet offering.

Risks of Investing Through Yieldstreet

Before investing in a Yieldstreet offering, keep these points in mind:

1.   There is always a risk that the borrower defaults on the loan - affecting your ability to generate returns. In general, most debt-based alternative investments carry a reasonable degree of risk - even if an investment platform like Yieldstreet pre-screens them.

2.  Yieldstreet doesn’t advise you on which opportunities to invest in. If you are relatively inexperienced, this can be risky, considering the unconventional nature of many of the opportunities listed on the platform.

Conclusion

This Yieldstreet review should give you a clear idea of what it can offer and whether it suits your investment needs.

Do remember that there’s always the risk of the borrower defaulting on the loan and that Yieldstreet doesn’t help you choose your investments.

However, the bottom line is that Yieldstreet is still very attractive for both accredited and nonaccredited investors who are looking to diversify their portfolio through alternative investments.

With over $1.5B already invested on their platform, there’s plenty of potential for investors to find the right investment offering for their needs.

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