Understanding Yieldstreet reviews requires knowing what Yieldstreet is all about. You need to understand the concept of Yieldstreet first and foremost. The information you need is detailed below.
Yieldstreet is an online platform that offers investors access to alternative investments in commercial real estate, marine projects, and even art.
It enables investors to participate in crowdfunding for a wide range of alternative investments such as real estate, commercial, legal, and art. The majority of offerings are only available to accredited investors.
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Yieldstreet Reviews in Full
While some crowdfunded real estate sites allow you to purchase a piece of commercial real estate properties, Yieldstreet instead crowdfunds the debt taken on to finance those investments and a host of other deals.
Yieldstreet launched its first offering in 2015 in litigation finance, which pairs investors with a plaintiff looking to borrow cash to cover expenses before an expected lawsuit settlement arrives.
It has since branched out into a variety of offerings, including financing industrial and residential property deals, commercial loans such as merchant cash advances, the purchase of oil tankers, and fine art.
Investors earn interest payments and return on principal investment over the life of the loans (although there’s always a risk of default).
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.
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.
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Yieldstreet Reviews – Advantages
Here are some of the advantages of yieldstreet reviews. In no particular order, we have them below:
1. Potential Returns
The most obvious value proposition is the potential for great returns. YieldStreet targets returns ranging from 8% to 20%, and it rejects over 90% of deals presented to the platform.
While no company can guarantee performance, it seems like YieldStreet’s offering could yield very solid returns.
2. Low Correlation
Another interesting thing to know about YieldStreet is the lack of correlation with the stock market.
High correlation means that an investment moves up and down in price at the same time a stock market index (say the S&P 500) moves up and down.
YieldStreet offers low-correlation investments. That means the ups and downs of YieldStreet reviews have not (to this point) correlated with the ups and downs of the stock market.
3. Yieldstreet Prism Fund
For non-accredited investors, you can invest in a fund that invests in alternative assets. Including low-correlation investments in your portfolio can be a smart move.
It smoothens the returns in your portfolio and tends to lead to higher returns overall. Including “alternatives” (anything outside of stocks and bonds) in your portfolio can lead to higher overall returns.
Yieldstreet Reviews – Disadvantages
There are several drawbacks to investing in YieldStreet. These drawbacks could be easily overlooked.
1. Limited Offerings
Right now, YieldStreet has one real estate offering and a “fund” which is a private, non-traded REIT (real estate investment trust).
If you really want to diversify your portfolio, you’ll need to constantly watch the site for compelling deals. Having real diversity in your alternatives allocation could take years.
2. No Secondary Market
YieldStreet investments aren’t liquid. In general, your money will be locked up for three or more years before your capital and interest are returned.
For many investors, that will be okay, but if you’re seeking liquidity, YieldStreet isn’t a good option.
3. Limited Track Record
While most of the deals I saw on YieldStreet’s site had yields close to YieldStreet’s projections, that could be coincidental.
It is very difficult to dig into YieldStreet’s historical performance. And even if you could, each deal is quite different from other/current deals on the site.
4. Investors are expected to be Experts
Investors on YieldStreet have to choose whether to invest in certain offerings. The offerings are unique, and YieldStreet provides lots of information on the deals.
However, most investors aren’t experts in litigation settlement investments or fine art investments. But investors on YieldStreet are treated like experts.
Personally, if I’m going to dig into the weeds of an investment, I want some control over the outcome. For example, I personally prefer owning a physical rental property as opposed to owning shares of a private REIT.
Pros & Cons of Yieldstreet
Here are the pros and cons of Yieldstreet reviews.
1. Access to alternative investments, including art, real estate, and legal settlements, that allow investors with plenty of assets to further diversify their portfolios
2. Investors receive regular interest payouts over the life of the loan
1. Higher-risk investments — best for those with a large amount of money to invest; limited investments are available.
2. Fees may be higher than other types of investment accounts; Yieldstreet IRA accounts cost 299 USD to 399 USD per year.
3. Investments are highly illiquid.
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.
How do we Review Real Estate Platforms?
NerdWallet’s comprehensive review process evaluates and ranks companies that allow U.S. customers to invest in real estate, primarily through non-traded REITs or private equity.
Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgments on which ones will best meet your needs. We adhere to strict guidelines for editorial integrity.
How Does Yieldstreet Work?
Yieldstreet was founded by a team of financial professionals who realized that the biggest money makers are heavily diversified across a number of solid alternative investments that pay dividends or generate passive income.
This realization was the seed that eventually grew into Yieldstreet.
The founders wanted to create a platform that allows regular retail investors to diversify their portfolios with income-generating investments in the same way that large funds can.
Yieldstreet uses a combination of its own money and investor capital to fund a variety of alternative investments.
Raising capital in this fashion allows Yieldstreet investors the ability to diversify their portfolios and generate passive income on one, user-friendly platform.
Yieldstreet has income-generating investments in the following areas:
1. Real estate
3. Short-term notes
4. Structured notes
5. Diversified investment funds.
From a performance perspective, the alternative investments offered by Yieldstreet are not tied to the stock market, which is by design.
Aside from generating passive income, the entire point of an alternative investment is to grow wealth while shielding investors from the volatility of the stock market.
Yieldstreet offerings are highly vetted by a talented group of financial professionals with a long track record of success.
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.
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.
Things you didn’t know about Yieldstreet Reviews
Yieldstreet reviews contain certain things you did not know about Yieldstreet. They include:
1. Yieldstreet Fees
Investor fees are never pleasant, but they are necessary.
While there are definitely some investment platforms with opaque fee structures that are invariably more expensive than the investor was expecting, Yieldstreet is not among them.
It has annual management and administrative fee of 1.5%. That is as simple and straightforward as it gets.
2. Ease of Use
Yieldstreet’s mission as a platform is to make alternative investing easier for retail investors with a simple platform.
This was accomplished, you can even sign up with a Gmail account.
The signup process starts with a quick questionnaire regarding your comfort level with alternative investments.
It evaluates which type of investor you are (accredited or non-accredited) and records your income level.
Then it gives you a menu of potential offerings to fit your profile.
This list is smaller if you’re a non-accredited investor, but it’s a huge plus that there are offerings for non-accredited investors.
The remaining account activation and funding process are pretty straightforward.
You must verify your investor accreditation status before you can buy into the Yieldstreet offerings that require it.
Additionally, you have to go through an ID verification process before you can invest at all.
The process of browsing investments and reviewing the relevant documents is simple.
Overall, the platform is well designed, and any investor with a basic understanding of the internet should be comfortable using Yieldstreet.
3. Investor Education
Making alternative investments available to retail investors is a great mission, but one that is doomed to fail if investors don’t understand how they work or why they’re important.
That’s why no platform is complete without a well-thought-out education section. Yieldstreet passes this test with flying colors.
Click on the Learn tab of Yieldstreet’s landing page for a screen that lays out the different asset classes Yieldstreet offers: real estate, marine, art, legal or commercial.
Clicking on any of those individual asset classes will take you to a primer on that asset, which includes a history of its past performance and the future outlook of the asset class.
This is especially valuable to an investor who wants to buy art as an alternative investment but doesn’t quite understand how that would work or make money.
Scroll down a little further for the Investor Toolkit and Alternative Investing sections. Click on either for a series of articles and videos on your chosen topic.
The video options make things crystal clear and are a nice bonus to the other content.
The Yieldstreet blog is another excellent resource.
Topics covered include different emerging real estate markets and more, and the frequently asked questions and glossary are also helpful.
4. Yieldstreet Offerings
Yieldstreet has a variety of offerings, including the Yieldstreet Prism Fund.
This is a multi-asset fund with holdings in a number of different asset classes and a buy-in of only $500.
The Prism Fund essentially allows non-accredited investors to buy into a diversified portfolio and invest in assets that normally require accreditation.
This fund is open until 2024 and targets an 8% annual return.
Accredited investors have a few more options, including the Art Equity Fund, which buys equity shares in art from around the world and holds it while it appreciates.
The buy-in here is 10,000 USD with a 5-year hold period and projected returns between 15 to 18%.
Investors who want a more traditional alternative investment have a solid selection of real estate options with buy-ins between 10,000 USD to 50,000 USD
Yieldstreet rounds out the offerings with an IRA-eligible structured note that has a 15,000 USD buy-in and a short-term note with a 500 USD buy-in.
It doesn’t have unlimited offerings, but what it offers was chosen with expertise and significant vetting.
5. Yieldstreet Historical Returns
Historical returns are a key indicator of the quality of offerings on a given platform. However, they are no guarantee of future success and don’t mean there is no risk of loss.
Since Yieldstreet’s founding in 2017, it has funded over 2 billion USD worth of investments and earned an average internal rate of return of 10.25%.
Bear in mind, that this is the average internal rate of return on all of Yieldstreet’s offerings. It doesn’t mean that every one of their offerings has turned a profit or that it’s impossible to lose money on Yieldstreet.
It should, however, give retail investors confidence that the offerings on Yieldstreet have a good chance of achieving projected returns.
6. Yieldstreet Mobile App
Yieldstreet’s app not only runs smoothly, it is also available for both iOS and Samsung operating systems.
There are many platforms that have mobile apps that only work with iPhones.
Regardless of what type of phone you have, the Yieldstreet reviews mobile app performs well and allows you to invest, track your investments or review new options right in the palm of your hand.
Summary of Yieldstreet Reviews
YieldStreet allows investors to invest in high-yield alternative assets. They have both direct investments for accredited investors and offer a fund for non-accredited investors.
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