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Investing your money is an important part of maintaining your financial health. And while putting money into the stock market is one common way to grow your money and build your wealth, it certainly isn't the only way to invest.
Once you're feeling secure in your finances, you might consider diving into alternative investments. Alternative investments are asset classes that do not include stocks, bonds and cash. For instance, collectible items like fine wine, coins, stamps and vintage cars can be an alternative investment. Private debt and real estate are other common alternative assets that can be invested in.
The options can be overwhelming and you might not even know where to start. Yieldstreet is a platform that helps you get started by giving you access to many different kinds of alternative asset deals and all the necessary details to guide you in your investments.
Below, Select reviewed how the site works and what you need to know in order to be eligible to get started.
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Yieldstreet gives investors the chance to participate in crowdfunding for alternative investments on the platform. Crowdfunding is the process of raising smaller amounts of money from a large number of people. So instead of having one person invest $50,000, crowdfunding allows 50 people to invest a minimum of $1,000 each to reach the same goal.
Yieldstreet also provides individual investors with opportunities to invest in private structured credit deals, which is a deal where an investor will get a minimum assured return, and the risk from a decline in earnings is protected. These deals are usually only available to institutional investors or hedge funds, though. The platform secures investments across deals which include commercial real estate, art and marine projects.
Investment minimums are usually around $10,000, which may not be best for those who don't have a lot of extra money to invest beyond their IRA or brokerage account. As of October 2022, over $4 billion has been invested in their platform with an 9.61% net annualized return, according to Yieldstreet.
It's also important to note that most deals on Yieldstreet are only available to accredited investors, which the Securities and Exchange Commission (SEC) defines as people with a net worth of more than $1 million — excluding the value of your primary residence — or an annual income over the past two years of at least $200,000 for individuals and over $300,000 for couples. The other option would be to hold certain certificates or credentials, such as Series 7, Series 65, and Series 82 licenses. So unless you fit these criteria, you likely won't be able to participate in most opportunities on the platform.
However, in August 2020 Yieldstreet established the Prism Fund, which is available to non-accredited investors. The minimum investment amount for assets within the Prism Fund is $2,500, which makes it a little more accessible.
You can sign up to start investing on Yieldstreet's website through Apple ID, email or Google. After choosing your sign-up method, the site will prompt you with some questions to determine if you are an accredited investor. If you meet the criteria, you can start tailoring your Yieldstreet dashboard to your investment preferences and needs.
You can find details about each of the investments Yieldstreet offers on its website. Currently, it offers investments in Real Estate Investment Trusts (REITs), art, supply chain finance investing and more. You can find details on the offering size, maximum and minimum acceptable investments, the expected annual investment return and duration. The platform will also explain the risks of the investment and any favorable highlights.
Notes are another form of alternative investment offered by Yieldstreet. A note is an obligation for a borrower to repay a sum of money with interest within a certain time frame, like six months or one year — similar to the way a loan works. In this case, individuals are investing in the likelihood that they will earn a return for lending money to a borrower.
Those who invest money into the short-term or structured notes offered by the site earn a return on their investment and interest payments over the life of the loans — but it is important to mention that there is always the risk of default. Because of this, every investment offering on Yieldstreet is backed by underlying assets, like a legal settlement or real estate, which means the company will have the means to potentially recoup any defaulted loans for financing investments.
For those interested in investing in art, Masterworks is another platform that allows you to invest in pieces from famous artists. You can purchase fractional shares of art for as little as $20. Read more in our Masterworks review.
Yieldstreet has an annual management fee ranging on average from 0% – 2.5%. There might also be investments with flat annual fees — such fees are disclosed on individual offering pages. Annual fund expenses may also be charged to investors depending on the legal structure of the offering, and specific information about these expenses can also be found on individual offering pages.
Yieldstreet is ideal for accredited investors who want to diversify their portfolios through alternative investments. Non-accredited investors are also accommodated on the platform through the Prism Fund, however, it's important to make sure that you have already exhausted other traditional investment accounts first.
Because you might need to lock up your cash for potentially long periods of time, you'll want to be relatively stable in your current financial situation. It's important that before you get into alternative investments, you should have a fully funded emergency fund, be contributing at least enough to receive the employer match for your 401(k), contributing to a Roth IRA and have a cushion of extra savings on the side.
It may be worth considering using a robo-advisor, like Wealthfront or Betterment, to invest your money before you start purchasing alternative investments. The platforms will create a diversified portfolio of ETFs for you based on your risk tolerance and investment time horizon.
Another crucial thing to keep in mind is to ensure less than 10% of your portfolio is composed of alternative investments like the ones offered by Yieldstreet. This way, you keep a diversified balance of all your assets.
The pros of Yieldstreet include wide-ranging access to alternative investments that are backed by assets, providing a form of protection in case of default. Cons include the fact that most of the offerings are only open to accredited investors and there are only a limited number of investments available. Overall, Yieldstreet makes the most sense for those who have already exhausted other traditional investment accounts, like brokerage accounts and retirement accounts, and have larger amounts of money to put toward alternative assets.