Investing your money is an important part of maintaining your financial health. And while putting money into the stock market is a common way to grow your money and build your wealth, it certainly isn’t the only way to invest.
Once you feel confident in your finances, you may want to consider diving into alternative investments. Alternative investments are asset classes that do not include equities, bonds and cash. For example, collectibles such as fine wine, coins, stamps and classic 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 may not even know where to start. Yieldstreet is a platform that helps you get started by giving you access to many different types 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 to be eligible to get started.
Yieldstreet review
Subscribe to the Newsletter Select!
Our best selections in your inbox. Shopping advice to help improve your life, provided weekly. Sign up here.
How Yieldstreet works
Yieldstreet also offers individual investors the opportunity to invest in private structured credit arrangements, an arrangement in which an investor will obtain a guaranteed minimum return and the risk of a decline in earnings is protected. However, these transactions are generally only available to institutional investors or hedge funds. The platform secures investments through agreements that include commercial real estate, art and maritime projects.
Investment minimums are generally around $ 10,000, which may not be the 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 a net annual return of 9.61%, according to Yieldstreet.
It is also important to note that most offers on Yieldstreet are only available to accredited investors, which the Securities and Exchange Commission (SEC) defines as individuals with net worth greater than $ 1 million – not including 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 meet these criteria, you probably 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 affordable.
You can sign up to start investing on the Yieldstreet website via Apple ID, email or Google. After choosing your sign up method, the site will ask you a few questions to determine if you are an accredited investor. If you meet the criteria, you can start customizing the Yieldstreet dashboard based on your investment preferences and needs.
What kind of investments are offered?
You can find details on each of the investments offered by Yieldstreet on its website. It currently offers investments in Real Estate Investment Trust (REIT), art, supply chain financial investments and more. You can find details on the size of the offer, the maximum and minimum acceptable investments, the expected annual return of the investment and the duration. The platform will also explain the risks of investing and any favorable highlights.
Notes are another form of alternative investment offered by Yieldstreet. A note is an obligation for a borrower to repay an amount of money with interest within a certain period of time, such as six months or a year, similar to the way a loan works. In this case, individuals are investing in the likelihood of earning a return on loaning money to a borrower.
Those who invest money in the short-term or structured notes offered by the site earn a return on investment and interest payments over the life of the loans, but it is important to remember that there is always a risk of default. For this reason, every investment offer on Yieldstreet is backed by underlying assets, such as a legal settlement or real estate, which means the company will have the means to potentially recover any defaulting loans to finance investments.
For those interested in investing in art, Masterworks is another platform that allows you to invest in works by famous artists. You can purchase fractions of artwork for as little as $ 20. Read more in our masterpiece review.
Commissions
Yieldstreet has an annual management fee that ranges from 0% to 2.5% on average. There may also be investments with fixed annual fees: these fees are indicated on the individual offer pages. The fund’s annual fees may also be charged to investors depending on the legal structure of the offering and specific information on these fees can also be found on the individual offering pages.
Who is it best for?
Yieldstreet is ideal for accredited investors looking to diversify their portfolios through alternative investments. Non-accredited investors are also hosted on the platform via the Prism Fund, however, it is important to make sure that you have already exhausted other traditional investment accounts first.
Since you may have to hold onto your cash for potentially long periods of time, you will want to be relatively stable in your current financial situation. It is important that before entering into alternative investments, you should have a fully funded emergency fund, contribute at least enough to receive employer correspondence for your 401 (k), contribute to a Roth IRA, and have an extra savings cushion on the side.
It may be worth considering using a robo advisor, such as Wealthfront or Betterment, to invest your money before you start buying alternative investments. The platforms will create a diversified portfolio of ETFs for you based on your risk tolerance and investment time horizon.
Another key thing to keep in mind is to make sure that less than 10% of your portfolio is made up of alternative investments such as those offered by Yieldstreet. This way, you maintain a diversified balance of all your assets.
Bottom line
The benefits of Yieldstreet include broad access to asset-backed alternative investments, which provide a form of default protection. The disadvantages include the fact that most of the offers are only open to accredited investors and there is only a limited number of investments available. Overall, Yieldstreet makes the most sense for those who have already run out of other traditional investment accounts, such as brokerage and retirement accounts, and have larger amounts of money to invest in alternative assets.
Keep up to date with Select’s in-depth coverage Personal finance, technology and tools, Welfare and more, and follow us Facebook, Instagram And Twitter to stay updated.
Editorial note: Opinions, analyzes, reviews or recommendations expressed in this article are those of Select’s editors only and have not been reviewed, endorsed or otherwise endorsed by any third party.
