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While investing in things like real estate, art, and large-scale projects have historically been opportunities reserved for the very wealthy, in recent years, the market has shifted, creating alternative routes for investors to get into these spaces without pouring in such significant and ongoing capital. One example of such an alternative route is crowdfunding investment platforms.
These generally allow investors to put down a smaller amount of money outright and pool resources in order to become partial owners of the investment, receiving income from it without having to cover the full cost, manage a property, or negotiate the investment’s eventual sale. For those looking to explore a new investment category, these sites provide a great point of entry.
In this article, we’ll be conducting a Yieldstreet review, exploring how they approach investing as well as the benefits and drawbacks of the platform, in order to help you decide if it’s right for you. Read on to learn more.
What is Yieldstreet?
While many investment platforms specialize in a particular type of investment, Yieldstreet was established in 2014 with the intention of cracking open the whole notion of high-cost investing, which was previously unattainable to all who fell below the tip-top of the upper echelon. Assets like commercial real estate, art, legal, and marine investments had once been far beyond reach for many investors.
According to Yieldstreet, they wanted to create a platform that made more types of assets accessible investment opportunities to a broader range of individuals, and in more ways. They developed an open growth ecosystem that allows investors to invest as they want, regardless of their net worth, in order to realize the full scope of their investment goals.
How does Yieldstreet work?
Where a real estate crowdfunding site might allow multiple investors to purchase a part of a commercial property, earning profit from rent and the eventual sale of the building they partially own, Yieldstreet goes at it the other way around: crowdfunding the debt taken in order to finance an investment—whatever it may be.
They work to connect investors with organizers directly, working to streamline the whole process of funding a project and helping everyone involved to more quickly reach their goals. Their platform is built on the idea of mutual support—many like-minded individuals working together in order to mutually benefit and progress. While these investment opportunities were previously only accessible to the ultra-wealthy, by allowing them to be covered through crowdfunding, more individuals in more diverse financial circumstances are able to grow their wealth, reaching their goals more quickly than they could have on their own.
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American franchise businesses
Investment returns and passive income
Hedge fund investments
Open to non-accredited investors
Multiple investment classes like art
High annual return over 9%
Pros of Yieldstreet
By now we’ve established that Yieldstreet is taking crowdfunded investments to a whole new level, bringing a group of investors into an asset arena they previously couldn’t have participated in. But is Yieldstreet safe?
Let’s dive into the specific benefits and drawbacks of this platform in order to help you more clearly understand whether or not Yieldstreet is a good investment for you. Here are the highlights:
- With Yieldstreet investors in every income bracket are able to access and participate in high-ticket investments, like those in the real estate, legal, art, marine, and commercial asset classes.
- Yieldstreet offers a selection of investment options, including their prism fund, professionally managed portfolios, as well as short-term notes, and individual offerings. Each of these has a different minimum investment.
- The prism fund is relatively accessible at $2,500 and is available to investors regardless of their accreditation status and net worth. Regardless of investment opportunities listed on the site, the prism fund is always open to new Yieldstreet users, or for existing users to buy more shares.
- Since investments on this platform are backed by assets, investors have a layer of additional protection in the event of default.
- The average annual return on Yieldstreet is 9.71% after taxes and fees, though each type of investment option yields a different amount. Short-term notes yield the lowest at 2.6%, prism funds average 8% and individual offerings can be as high as 20%.
- Yieldstreet offers investors both traditional and Roth IRAs.
- The platform does include annual management fees, but they’re relatively low compared to other online investment platforms. Depending on your investment, management fees will vary somewhere between 0% and 2.5%, and others may apply as well—read the fine print on individual investments before proceeding.
- Because of the structure of Yieldstreet, individual investors have the rare opportunity to invest in privately structured credit deals.
Cons of Yieldstreet
While that pros list is robust, there are still some less-desirable aspects of the platform to cover before you’ll be able to make a well-thought-out determination on whether or not this platform is a good fit for you. Here are some potential dealbreakers for you to weigh:
- Investments made on Yieldstreet are highly illiquid—once you put money in, it’s locked up in the investment until it reached its designated completion date. Moreover, Yieldstreet notes in their fine print that investments have the potential to go past their “target durations,” meaning you may be stuck in the investment even longer than you originally agreed to be.
- While the platform touts itself as being accessible regardless of the income of accreditation, the majority of investment opportunities on the site are only available to accredited investors, meaning you’ll need at least $1 million in net worth and proof of a minimum annual income of $200,000 ($300,000 if shared with a spouse) for the last two years in order to participate.
- Although some things, like shares to the prism fund, are available to all investors at all times, there are limited individual offerings listed at any given moment, and some say new listings are not added frequently enough.
Is Yieldstreet right for me?
While Yieldstreet is a great way to get access to different kinds of assets, especially if you’re not able to break into a given asset class through more traditional channels, it’s not the right platform for everyone. Who benefits most from using Yieldstreet? Here are some prime characteristics for investors on this platform:
- Investors looking to diversify their portfolio from any income bracket, especially if they’re accredited.
- Investors who can afford to have larger chunks of their wealth locked up in illiquid investments, since it’s possible investments may go longer than advertised and there’s no opportunity to sell them in a secondary market.
- Those looking to increase their income significantly—there are many investment opportunities on Yieldstreet that produce serious returns.
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Although this isn’t the perfect platform for all investors, it’s a highly rated investment tool that has the potential to deliver some serious returns for your effort. To know whether or not this is the tool for you, however, you’ll need to carefully consider all the above-mentioned points in this Yieldstreet review.
What are you able to put forward for a minimum investment? How long can you do without a payout? What investment opportunities will best diversify your existing portfolio, and does Yieldstreet provide them? If the outlined cons are not a deterrent for you, you’ll likely have a great experience with this platform.