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The vast majority of investors have stocks, bonds and maybe real estate in their portfolio.
Alternative investments, such as artwork, are far less common among average investors. Why is that?
This is because alternative investments have typically been reserved for institutions and accredited investors based on accessibility. Simply put, these investments traditionally required hundreds of thousands, if not millions of dollars to purchase.
Yieldstreet is a platform that was created with the purpose to expand access to alternative investment options such as art, private equity, and commercial real estate.
So, what exactly is Yieldstreet and how does an investment on their platform work?
In this article, we provide an in depth Yieldstreet review. Let’s hop right in!
What Is Yieldstreet?
Yieldstreet got its start in 2014. Milind Mehere, founder and CEO, had a simple vision. He wanted to make alternative investment more accessible to the everyday investor.
“What’s the path to financial independence? Not with overexposure to the stock market. I wanted access to the same investment products used by hedge funds and institutions, but I and many others didn’t have it. We built Yieldstreet to change that.” – Milind Mehere
- Yieldstreet investment offerings include art, commercial debt, consumer, legal, real estate, corporates and more
- Their Prism Fund actually allows members the ability to invest across all of these asset classes in one investment
Though if you want to choose your investments on your own, they also offer you the ability to make you own portfolio – more on this later!
Since inception, the platform has gained over 400,000 members. They’ve also funded over $4 billion in deals.
How Does Yieldstreet Work?
Creating an account with Yieldstreet is really quite simple. You can easily set up an account on their website and fund your first investment in a matter of minutes.
The account setup will require information such as name, email, phone number, address, SSN, and accreditation status.
The platform has a 5 step process all the way from deal selection to investor returns:
- The first step is deal origination. In this step, Yieldstreet partners with originators to identify long term opportunities that are best for potential investors.
- Yieldstreet then conducts their own internal rigorous screening process to identify the best investments to present to potential investors. Of all deals they have reviewed, just 9% have made it through their screening process.
- Once a deal make it to the website as an offering, investors are then able to choose which investments to add to their portfolio. Yieldstreet provides investors with education and information to ensure the most informed decisions.
- Now that investments have been screened by Yieldstreet and investors, performance is tracked. Depending on the investment type, interest may be paid out over time. Regardless of investment type, Yieldstreet will periodically provide investors with performance updates.
The last step is repayment at the end of a particular deal. At this time, the principle and any earnings are paid to investors. Those funds can then be used in another investment or withdrawn from a Yieldstreet account.
You can learn more about Yieldstreet’s due diligence process on their website.
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|Stocks, ETFs, Crypto, Alternatives (Including Art & NFTs)
What Investment Options Does Yieldstreet Have?
Yieldstreet provides investors with a few options. These options vary depending on accreditation.
An accredited investor is someone deemed by the SEC that does not need financial protection.
All investments carry risk. However, some more than others. In an attempt to protect everyday investors, the SEC limits some investments to those with an accredited status.
To be considered an accredited investor you either need to have an annual income of $200,000+ or have a million dollar net worth.
Fortunately, non-accredited investors can invest on this platform with their flagship fund, the Prism Fund.
Let’s take a look at that one first.
Non-Accredited Investment Options
The first option is an investment in their Prism Fund. This fund provides investors with exposure to multiple assets class like art, private equity, commercial, legal, and more.
An investment in the Prism Fund does not require accreditation!
This is a huge plus for those looking for exposure into other non-traditional asset classes as many investments are restricted to those who are accredited.
- The minimum investment for this fund is just $2,500
- While art makes up just 4.1% of the fund, many investors still choose the Prism fund for initial exposure to art as an investment
- The fund pays a quarterly distribution and allows investors the opportunity to liquidate on a quarterly basis if desired
Accredited Investment Options
The remaining investment options on the platform require accreditation status. (Important to note that accredited investors can also invest in the Prism Fund.)
- The first accredited investment option is to build a custom portfolio of investments made available on the platform. The minimum investment for these options vary. Some are as low as $10,000, and others are as high as $30,000. The investment options vary from art funds to real estate and from transportation to venture capital.
- The other investment option for accredited investors is short term notes. These are 6 and 9 month debt instruments with varying targeted yields.
Yieldstreet Operating History
Since the launch of the platform, the company has yielded an impressive 9.6% net annualized return. (This figure does not include their short term notes program.)
Of course, that return can also vary widely depending on the investments you choose. Should you invest in the Prism Fund, you would be more diversified. An investment into individual offerings may have a much higher or lower return.
The fees on the platform are very simple. It’s simply 1.5% of invested funds. Cash held in the account is not subject to a fee.
This fee structure is one of the reasons why Yieldstreet has been successful. Many other alternative investments feature high commissions and difficult to understand fee structures.
- Access to alternative investments beyond just art
- Access to Prism Fund, which allows you to invest in a number of alternative asset classes at one
- Ability to select individual investments (accredited investors only)
- Low fees that are easy to understand
- Low minimum investments required
- Main Prism Fund has low allocation of art
- Accreditation required for many investments
If you are interested in getting exposure to the art market, then Yieldstreet may be the platform for you. In addition to art, you could also gain access to a number of other asset classes often thought of only for the ultra wealthy.
Yieldstreet’s vision is to make non-traditional assets more accessible. In the past, an investment was highly difficult to find for everyday investors.
Today, Yieldstreet makes the entire process easy. Starting with their rigorous screening and ending with performance tracking, investors can trust Yieldstreet to provide only the best of options.