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Best for more experienced investors, YieldStreet is a great way to diversify your portfolio while getting deals that normally are only open to private investors. If you're okay with risk and have the minimums, YieldStreet might be a good option.
- Returns Averaging 11.54% IRR
- Short-Term Deals
- Expert Selection
- High Risk
- Low Liquidity
- High Minimums
- Lack Of Customer Support
Private investments are an alternative way to grow your money. With private deals, you get access to more exclusive investments that aren’t available on the public market. This can be riskier than investing in the public market, but the private market actually does have decent returns. Over the past 10 years, private investments yielded a 14.2% average annual return, while the S&P 500 returned 13.7%.
However, the biggest issue with private investments is that you need a lot of money to get your foot in the door. Like, we’re talking millions.
That’s where YieldStreet comes in. Instead of supplying private deals to bigwig oligarchs, YieldStreet makes private deals more affordable for us normal folks. Its goal is to make alternative investments more accessible, curating different investments and doing due diligence on behalf of its investors.
Most YieldStreet investments require $10,000 to get started (which is considered affordable, believe it or not), but some of its asset classes have a low $2,500 minimum, too.
Any way you slice it, that’s a lot of cheddar—so is YieldStreet really worth it?
YieldStreet investments aren’t always the sexiest, but they do give investors exposure to big-league investments like:
- Luxury car leasing
- Multi-family housing
- European legal finance
- Energy structures
I’ve always been curious about alternative investments, so I signed up for YieldStreet to get the inside scoop.
What Is YieldStreet And How Does It Work?
Since 2014, YieldStreet has been a source of alternative investments. Originally, it was only open to accredited investors. Everyday investors like myself are definitely not accredited, so this meant the platform was closed to non-rich folks for many years.
However, YieldStreet opened up some offerings to non-accredited investors, which made the platform more accessible.
YieldStreet allows you to earn passive income on private investments outside of the public market. As far as I can tell, no other online platform is offering private investments like YieldStreet, so it can be a good way to get your foot in the door.
Even though it’s in a class of its own, YieldStreet has a decent track record. It was #46 on the Inc. 500 in 2020 and has over 350,000 members. Since its founding, investors have put in $2.3 billion into investments through YieldStreet, bringing in over $189 million in interest payments.
When you create a YieldStreet account, you’ll need to verify your information to fund an account and start investing.
Regardless of how you want to invest, you’ll start with a YieldStreet Wallet. This is a checking account that earns 0.2% interest on the funds you keep in the wallet.
YieldStreet Wallet allows you to hold cash in YieldStreet so you can avoid the 2 – 3 days it takes to process ACH transactions. Translation: you can invest in opportunities more quickly without the wait time (as long as you keep funds in the account, that is).
Once you’ve funded your YieldStreet Wallet, you can invest in different asset classes, including:
- YieldStreet IRA: YieldStreet provides an IRA, which you can open within seven days of creating a new YieldStreet account. It’s a cool way to fund your retirement with private, alternative investments. It allows for both Traditional IRAs and Roth IRAs, as well as 401k rollovers.
- Art: For a minimum of $10,000, you can own a fractional share in a piece of artwork. YieldStreet selects mid-career artists and a diverse pool of art based on the expertise of third-party appraisers and proprietary databases. YieldStreet says art investments have returned 360% since 2000, and investors have put in $400 million in art on YieldStreet.
- Multi-class fund: The Prism Fund launched in 2020, opening up YieldStreet to non-accredited investors. It’s sort of like a mutual fund, but with more limitations. Even so, it’s a popular option: 50% of YieldStreet investors put their money into the Prism Fund. With a minimum investment of $2,500, you can access several alternative investments in one fund, including art, commercial, legal, and real estate. The professionally-managed fund has a 1.5% annual fee, but you can only liquidate shares quarterly with YieldStreet’s approval. Oh, and if you’re in Nebraska or North Dakota, you can’t invest in the Prism Fund—sorry!
- Real estate: Minimums for real estate will depend on the specifics of the opportunity, but they usually start at $5,000. That’s a lot of money, but it’s just a fraction of what you would need to invest in real estate anywhere else. YieldStreet has a stringent vetting process for real estate and tries to diversify its property types and markets to hedge against risk.
- Short-term notes: This is another beginner-friendly option with a $2,500 minimum. Short-term notes have higher interest rates than CDs, and they’re entirely fee-free. You’ll earn monthly interest payments at an annual rate, and the short duration means you can get your money back more quickly.
- Structured notes: This comes with a $15,000 minimum. That’s a lot, but these investments normally require $250,000 to get your foot in the door. With structured notes, you can invest in thematic investments like tech or consumer goods. YieldStreet only issues structured notes from reputable banks like Goldman Sachs. They’re usually a shorter duration, too, lasting about a year to a year-and-a-half.
- Supply chain investing: This option is only for accredited investors and has a $10,000 minimum. With supply chain investing, you offer financing to manufacturers who need to fund their operations.
Phew! Are you dizzy yet? Yieldstreet offers a lot of alternative investment options, which makes it both exciting and treacherous for investors. Like any investing platform, Yieldstreet has both pros and cons. Check out my YieldStreet review to see if it’s a good option for your situation.
- Returns: The coolest thing about YieldStreet is that its average internal rate of return (IRR) is 11.54%. Obviously no investment is guaranteed, and alternative investments are inherently risky, but the returns can make the risk worthwhile. The private market can generate bigger returns than what you would see on the public market—if you’re willing to risk it all.
- Short-term deals: Not all of YieldStreet’s deals are short, but many of them are. Although these investments aren’t very liquid (meaning you can’t pull your money out of them easily), it’s not like your money will be tied up for 10 years. More often than not, YieldStreet’s investments last 24 – 36 months. Depending on the investment, you’ll receive scheduled payouts, which is a nice way to generate passive income.
- Expert selection: YieldStreet has a team of in-house experts, as well as third-party verification services, to help them choose worthwhile investments. While it’s good knowing that a team of art and real estate experts are backing you up, I still recommend being an educated investor. Experts are great, but personal responsibility and education are always a must, regardless of where you’re investing your money.
- Diverse investments: YieldStreet does give you a wide range of alternative assets to choose from. The Prism Fund gives you exposure to multiple alternative investments, too. Since private investments operate independently from the stock market, it could be a good way to hedge against what’s going on in the public market.
- It’s litigious: This sounds like a weird pro, but hear me out. Unfortunately, borrowers have defaulted on YieldStreet loans before. The good news is that YieldStreet takes that seriously. The platform sues the borrowers on your behalf to get the money back. Normally you would have to sue the borrowers yourself, and nobody wants to do that.
- High risk: Look, alternative investments are always going to be riskier. Although YieldStreet’s minimums are nothing compared to what you’d normally need in the private market, $10,000 is a lot of money. And since there’s no guarantee of private investments paying off, there’s a good chance you’ll lose your money. There are also risks of low performance, fraud, and poor market conditions, so keep that in mind. And even though YieldStreet is a safe platform, what about the borrowers you’re investing in? You’re asking Yieldstreet to vet people for you, and occasionally they’re going to get it wrong.
- Low liquidity: YieldStreet isn’t like a Vanguard ETF where you can wake up and decide to sell your shares immediately. Private investments mean that you can’t really sell off your shares. And even if you want to liquidate your shares, YieldStreet will only let you do this quarterly—with their permission. It could mean your money is tied up in your investments and you won’t be able to get it back until the term ends. That isn’t a deal-breaker for everyone, but the lack of flexibility is definitely something you need to know before you invest.
- Customer support: As a YieldStreet user, I had an incredibly hard time finding customer support. There isn’t really a “Contact Us” page, and when I did manage to find a way to get in touch, I was directed to a chatbot. After more digging, I found customer support information in Yieldstreet’s Terms and Conditions. You can email them at [email protected] or text HELP to 844-943-5378 to get in touch with the team. But even so, I had to do a lot of digging to find this information. Since YieldStreet moves so much money on the platform, it’s a little unsettling that I couldn’t easily get in touch with someone.
- High minimums and accreditation: Some of YieldStreet’s assets have a $2,500 minimum, which is great for small-time investors like myself. But if you aren’t accredited (or you just don’t have $10,000 lying around), it can be hard to get the most out of the platform. It’s okay if you just want to put money in the Prism Fund, but know that a lack of accreditation is going to limit what you can do on YieldStreet.
- Time limits: YieldStreet’s deals are open for a limited amount of time. They function sort of like a cohort, which means that, if you don’t get in when it starts, it’s not like you can jump in whenever you want. This is why it’s so important to have funds in your YieldStreet Wallet, so you can quickly invest in opportunities without the delays that come with ACH withdrawals.
Who Is YieldStreet Best For: Our Take
YieldStreet is, by far, the most unique investing app I’ve ever used. With that said, this platform is definitely not for everyone.
In my opinion, YieldStreet is better for investors who:
- Make a lot of money. By that I mean you’re earning about $300,000 a year and want to put some of your extra funds into investments, but you don’t have millions to sock away.
- Want to hedge against the public market. If you want to add alternative investments to your portfolio, I recommend going with the $2,500 minimum Prism Fund just for speculation.
- Are experienced in investing or knowledgeable about alternative investments. If you were an Art History major and you have $10,000 you want to invest in artwork, YieldStreet makes this asset class more affordable for us non-millionaires.
I’m not saying that beginners can’t invest on YieldStreet, but it’s a good idea to understand how the public market works before you explore alternative investments.
Definitely don’t invest in YieldStreet if putting up $10,000 would account for more than 10% of your portfolio. You don’t want to put all of your eggs in one basket, after all.
At the end of the day, YieldStreet is intriguing, but it isn’t for the faint of heart. I recommend sticking with ETFs, stocks, or bonds if you’re new to investing before diving into YieldStreet.
But if you’re a more established investor with a higher income, go for it! Just remember to keep your portfolio diversified and balance to protect against the unknown.