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Rapidly-growing alternative investment platforms such as Fundrise and YieldStreet are quickly capturing the attention of investors looking for crowdfunded opportunities. Whether you’re looking to generate passive income or long-term growth, the two platforms provide unique options for any budget.
Fundrise provides low fees and investment minimums plus higher-than-average returns, all geared toward long-term investing. YieldStreet offers a wide range of alternative investments for accredited investors, but its offerings come with more fees, higher risk, and no liquidity.
Before you choose between Fundrise or YieldStreet, find out which is better suited to your goals by reviewing the pros and cons, plus a side-by-side comparison.
Fundrise VS YieldStreet: Alternative Investing
As leaders in crowdfunded alternative investments, Fundrise and YieldStreet are often the first platforms people turn to when looking to build a diverse portfolio.
The alternative investment industry, which includes real estate and excludes traditional investments such as stocks, bonds, and cash, is one of the fastest-growing fields in finance and is expected to grow by 59% over the next two years, according to a report by Preqin.
“Alternative investments provide an additional layer of diversification and are virtually unaffected by market turbulence, making them powerful risk management instruments.” – Ari Rastegar, Forbes Business Council
With more than eighty percent of investors planning to increase their alternative investments through 2025, crowdfunded platforms are rapidly gaining popularity with the masses. And while that growth is a good thing, it also means potential investors are bombarded with choices about where to invest and what to invest in.
In this article, we compare Fundrise vs YieldStreet. Both platforms provide budget-friendly opportunities for “regular folks” to generate passive income or invest for long-term growth, but which one is right for your goals and budget?
Fundrise VS YieldStreet Comparison
Despite their similarities, the two platforms also have distinct differences in what types of offerings they provide, their fee structures, liquidity, risk, and average returns.
Fundrise provides investors with a budget-friendly way to get started in real estate investing, without the need to spend a lot of time in research and due diligence.
YieldStreet is better suited to more experienced, accredited investors looking for alternative investment options.
Both platforms provide a way to build investment portfolios outside of the stock market that can generate passive income and long-term growth.
What Is Fundrise?
Named #1 top real estate crowdfunding platform of 2021 by Business Insider, Fundrise makes real estate investing simple and affordable by providing REIT (Real estate investment trusts) investing options that are open to non-accredited investors.
What Is An eREIT?
A REIT is a company that may be public, public non-listed, or private, that allows people to passively invest money into a portfolio of real estate assets.
To qualify as a REIT, companies must meet several criteria, including:
- Pay at least 90% of its taxable income to shareholders.
- Invest at least 75% of its assets into real estate.
- Earn at least 75% of its gross income from real property rentals, interest on mortgages financing real property, or real estate sales.
- Have at least 100 shareholders.
An eREIT refers to REITs that are sponsored by Fundrise. The term “eREIT” is trademarked by the company.
Fundrise’s eREITs are public but non-listed. They’re not traded on the stock exchange but are open to all investors.
Unlike many other REITs, Fundrise sells directly to investors, which eliminates the need for brokers and significantly reduces your investing fees.
Investing on Fundrise also saves you from having to conduct time-consuming research on individual investment properties or hire costly investment advisors, since their experts choose which properties to invest in.
For example, in addition to managing and monitoring the performance of your investments on the Fundrise app, you also receive portfolio updates through email.
The platform provides investment options to help you generate passive income and balance your investments for long-term growth.
Fundrise provides several advantages over other investment platforms, including low minimum requirements, low fees, and a highly-rated, user-friendly app to manage and monitor your investments.
- Low minimum investment requirements: Fundrise gives you five account types to choose from and allows you to get started for as little as $10.
- Low fees: Fundrise’s fees total 1% annually, which includes a 0.15% investment advisor fee and a 0.85% asset management fee. This saves you up to 15% compared to other REITS.
- Higher-than average returns: Overall, Fundrise’s cumulative returns average 9% in the first year and 74% (on original investment) by year six. Its 210K+ active investors have earned more than $160 million in dividends.
- Highly-rated, user-friendly app to manage and follow your investments. The Fundrise app has a 5-star rating on the Google app store and a 4.9-star rating on the Apple app store.
If Fundrise is a good match for your investing style and goals, chances are you’ll become a satisfied customer.
However, the platform is geared toward long-term real estate investments, so if you’re looking for something short-term or for other types of alternative investments, it may not be the best place for you.
- Geared toward long-term investors: If you withdraw your Fundrise investments before five years, you’ll pay redemption fees. These vary between 1 – 3% based on your investing plan.
- Fine print is critical: People who are unhappy with Fundrise are typically people who didn’t pay attention to the terms and policies before signing up. If you’re not familiar with its five-year commitment and early redemption fees, you may be disappointed if you try to withdraw early.
- Full range of investment options only available to premium account holders: Starter and basic accounts provide good options for beginner investors, but you’ll need to spend $50 – $100K to access top-tier features such as the Fundrise eFund and premium customer support.
- Investments are limited to real estate: Fundrise does not provide options for other alternative investments such as art or legal assets.
While Fundrise makes it easy to invest in real estate with low minimum requirements and a user-friendly app to manage your investments, it is limited in the type of investments you can own, and is also better suited for long-term (five years or more) investors.
Read our full Fundrise review for more information on Fundrise.
What Is YieldStreet?
YieldStreet provides a selection of crowdfunded, curated investment options across several alternative investment categories such as art, real estate and debt instruments.
In addition to curated investment options, the company also provides a “Prism Fund” option that allows investors to generate passive income through a balanced portfolio of assets. It includes corporate, commercial, consumer, and real estate assets.
The Prism Fund is YieldStreet’s only option for non-accredited investors, and allows anyone to get started with as little as $2,500.
What Is An Accredited Investor?
To ensure that investors are financially educated enough to take large risks and to sustain significant losses, U.S. Federal law limits certain securities investments to “accredited investors.”
- Accredited investors either earn more than $200,000 per year or have a net worth of more than one million dollars or hold a Series 7, 65, or 82 license in good standing.
If you aren’t an accredited investor, you can invest in YieldStreet’s Prism Fund, but none of its other offerings.
Accredited investors can put their money into any of the projects listed on the platform, although investment opportunities close as each project is funded.
For example, one offering titled “Structured Notes Diversified Portfolio XII” consists of structured notes featuring underlying stocks such as Dish Network Corp (DISH) and United Rentals (URI). At the time of this writing, the portfolio offering size is $1.5 million and has already been 51% funded.
To invest in this portfolio, you would need a minimum of $15,000, which is not an unusual minimum for YieldStreet’s curated offerings.
YieldStreet provides a wide selection of alternative offerings for accredited investors, plus its Prism Fund for non-accredited investors.
How Do YieldStreet Fees And Profits Work?
YieldStreet fees, average returns, and profits vary per project since most of its investment opportunities are unique offerings.
Typically, the company charges between 0 – 2.5% in annual management fees, plus annual expenses. However, fees, policies, and returns vary from one project to the next.
For example, the Art Equity Fund II: Artists of Harlem offering lists a projected annual return of 13 – 17%.
After the fund pays its expenses (detailed on the offering page) and returns investors’ capital contributions, proceeds are paid to investors as follows:
- All proceeds (after expenses and capital contributions are paid) up to 15% go to investors.
- After 15% earnings, proceeds are split between investors (85%) and Managers (15%).
Each offering page provides comprehensive and complete details on the terms of the investment.
Some of the information you’ll find on offering pages includes:
- Overview of project
- Minimum investment amount
- Projected returns
- Term length
- Full details on fees and returns
- Payment schedule and structure
Each offering is open to YieldStreet investors only until it is fully funded. You can see what percent of the project is still open to funding at the top of its page.
Because each offering accompanies different terms, fees, and expected returns, you’ll need to visit individual offering pages to understand how YieldStreet fee and payment structures work.
YieldStreet makes it easy to get started with an easy signup process and excellent guidance for new investors. Its diverse selection of offerings, from financial notes to art projects, provide unique opportunities that attract many accredited investors.
- Easy signup process: YieldStreet lets you get started by answering a few simple questions, and does not require any personal information (other than your name and email) to open an account. It does ask you about your income and earnings, to determine whether you fall into the accredited investor category.
- Excellent guidance for beginners: When you sign up, you’re immediately offered two choices: 1. Start investing right away, or 2. Learn more. The option to learn more steps you through alternative investments as well as the platform’s features — all before you share any information or pay any money.
- Opportunity for non-accredited and budget investors: The Prism Funds provides non-accredited investors an opportunity to invest in a balanced portfolio of assets, generate passive income, or invest for long-term growth — even on a budget. Its Portfolio Simulator allows you to test different investment strategies to help you determine how much and how long to invest to reach your goals.
- Diverse investment options: YieldStreet’s curated offerings range from financial notes and portfolios to art projects and real estate. You can invest in the things that interest you or build a balanced portfolio of many different types of assets.
There are many reasons to love YieldStreet as an investment platform, however, before you jump in and get started, let’s take a look at what many consider its “cons.”
While YieldStreet provides ample opportunities for alternative investments, it’s not the right platform for everyone. Below we cover some of its drawbacks to help you decide whether it’s the right investment platform for you.
- Fees may run higher than average: YieldStreet fees, which depending on the offering, run between 0% – 2.5% per year, (with some carrying a flat-rate annual fee), plus annual fund expenses. For example, its Prism Fund costs 1.5% annually and its IRA funds can cost $299 to $399 each year. Specific fees and expenses are listed on each offering page.
- Excess profits clause: Typically, proceeds above the projected returns aren’t paid at 100%. For example, your offering might share the proceeds with Managers after 15%.
- Most options are only open to accredited investors. While its Prism Fund is open to anyone, the platform’s primary focus is clearly toward accredited investors.
- Higher than average risk: In some cases, borrowers may default on their loans, causing you to lose your principal investment. The platform does provide collateral-backed financing, but you still risk ending up with no returns and possibly losing your principal investment.
- No liquidity: Typical YieldStreet investments (not including the Prism Fund) don’t allow you to take your money out until the term of your investment arrangement is complete, which could be many months or even years.
YieldStreet provides exciting options for crowdfunded alternative investments, however, the fees and risks involved, plus the lack of liquidity, mean that it’s not the top choice for everyone.
Fundrise VS YieldStreet — Which One Is Right For You?
Interest in alternative investments such as the ones offered on Fundrise and YieldStreet is growing rapidly. Crowdfunded investing platforms like these ones provide opportunities for regular people to generate passive income and long-term earnings.
On Fundrise, investors get started for as little as $10, and on YieldStreet, for as low as $2,500.
Fundrise is a real estate investment platform that crowdfunds REITs and YieldStreet crowdfunds a variety of alternative investments, including real estate, art, and structured and short-term notes.
Which platform you choose — Fundrise or YieldStreet — depends largely on your investment goals and style, as well as your income.
People earning less than $200,000 a year or people interested in lower-risk REITs will likely prefer Fundrise.
Accredited investors looking for higher returns and willing to take more risk may prefer YieldStreet.