Physical assets are becoming a popular investment hedge so that you don’t have your entire investment portfolio in the stock market.
But investing in tangible assets can be difficult and expensive compared to buying stock and bond index funds.
Yieldstreet can simplify investing in alternative assets including art, real estate, and business contracts.
This Yieldstreet review can help you learn more about investing in stock market alternatives and help you diversify your portfolio.
Table of Contents
- What is Yieldstreet?
- Is Yieldstreet Only for Accredited Investors?
- Investment Account Options
- Investment Minimum
- Yieldstreet Fees
- Tax Treatment
- Yieldstreet Investment Options
- Is Yieldstreet Good?
- Pros and Cons
- Yieldstreet Alternatives
What is Yieldstreet?
Yieldstreet lets investors directly invest in physical assets such as real estate, art, and airplanes. Typically, these deals require a lot of capital and expertise that make these opportunities difficult for individual investors to get into.
But using a platform like Yieldstreet can make it possible for individuals to invest with reasonable minimums and the management company handles the day-to-day affairs.
Is Yieldstreet Only for Accredited Investors?
Most Yieldstreet investment offerings are only for accredited investors. This requirement applies to individual offerings and short-term income notes.
You must meet one of these requirements to be an accredited investor:
- An annual income above $200,000 ($300,000 for joint investors) for the last two years
- Minimum $1 million net worth (excluding your primary home value)
Non-accredited investors will only be able to invest in the Yieldstreet Prism Fund. This investment vehicle invests in the various physical asset classes and pays quarterly distributions.
Investment Account Options
Taxable and tax-advantaged investment accounts are available on the platform.
Investors can open a Yieldstreet IRA that can be available as a traditional, Roth or SEP IRA. Investors can also roll over an existing retirement account to invest in alternative assets instead of stocks and bonds.
This self-directed IRA is separate from the brokerage account that holds your stocks and bonds. One drawback of this IRA type is the annual fees that online brokers don’t typically charge.
The annual fee for a Yieldstreet IRA depends on the account balance:
- $299: Account balance between $0 and $99,999
- $399: Account balance above $100,000
Below is the investment minimum for the three different Yieldstreet investment options:
- Individual offerings: $5,000
- Short-term notes: $1,000
- Prism Fund: $1,000
The initial minimum for individual placements varies and can be higher than $5,000. For example, some recent offerings require at least $10,000 or $25,000.
Most individual offerings have a minimum investment commitment of up to five years. Financing notes may only require a one-year investment horizon.
Investors can expect an annual management fee between 1% and 2% for any open position. This fee is competitive with other alternative asset platforms.
Short-term notes don’t have an annual management fee making these a notable alternative to “safe” investments with potentially lower yields.
Investment offerings will either receive a 1099-DIV or K-1 tax form. The investment overview page lists the tax structure and other key details like the investment commitment, targeted rate of return and the annual investment fees.
The Prism Fund is open to non-accredited investors and uses the simpler 1099-DIV tax form. This is the same tax treatment that stock index funds and most individual stocks qualify for.
Yieldstreet Investment Options
Here’s a closer look at what you can invest in through Yieldstreet.
Being able to directly invest in various alternative asset deals can be the most compelling reason to use Yieldstreet.
Investors can have more control of their portfolio when doing individual deals. The drawback is that there may only be a few available offerings and they may not necessarily be for the asset class you want to invest in. But the deals do change frequently so if you are patient you’ll likely find a deal that suits you.
Here are the asset classes that are available as individual offerings:
It’s possible to invest in individual real estate projects like single-family homes in Georgia or a multi-family project in Michigan. These offerings may make it easy to invest in a specific geographic area.
Another offering is the Real Estate Opportunity Fund that invests in a basket of commercial real estate with debt or equity financing.
These offerings can be similar to the best real estate crowdfunding sites that let you invest in individual deals or a managed portfolio.
Investors can finance business deals and receive payment from future profits.
One example is supply chain financing, where the raised cash pays the suppliers. Investors receive the interest payment when the loan matures.
Investors can invest in legal offerings that may award the client an advance payment before receiving a legal settlement. Investors receive a portion of the final legal settlement.
In many cases, the legal funds have a basket of similar lawsuits and investors receive a small amount of each successful settlement.
Recent marine offerings may fund the scrapping of a retired shipping vessel or finance the acquisition of a new ship.
An aviation fund lets investors earn profits from leasing commercial aircraft.
Blue-chip art deals can also take place on Yieldstreet. These offers can earn a profit when another buys the collection at a higher price.
Accredited investors wanting to park their cash for a short time and earn interest should consider the short-term notes. The investment term is three months and has no annual management fees.
Yieldstreet Prism Fund
The only investment option for non-accredited investors is the Prism Fund. Accredited investors may prefer this method to quickly diversify into alternative assets and the low $1,000 investment minimum.
The fund claims an 8% annual yield and has 1.5% in annual management fees.
This fund holds positions in these asset classes:
- Real Estate
- Corporate preferred bonds
Unfortunately, this fund isn’t available to Nebraska or North Dakota residents.
Is Yieldstreet Good?
Yieldstreet is one of the easiest ways to invest in alternative assets. It might be the only platform some investors use as you can get exposure to multiple asset classes.
While non-accredited investors cannot invest in individual offerings, the Prism Fund is an effective alternative with a low investment minimum. Unlike other crowdfunding investments that only invest in one asset class, this fund gives exposure to several with a single buy.
Pros and Cons
- Many investment options
- Prism Fund and short-term notes have low investment minimums
- Self-directed IRAs are available
- Most offerings are for accredited investors only
- Investments may require a multi-year investment commitment
- Few open offerings
One downside of Yieldstreet’s individual offerings is the limited availability and investment selection. These platforms may provide more investment options and are open to non-accredited investors.
You can invest in art with Masterworks. Investors can buy shares of contemporary and classic works with an investment period between 3 and 10 years.
Read our Masterworks review to learn more.
Fundrise offers crowdfunded real estate funds in commercial and multi-family projects. The investment minimum starts at $10 but no individual investments are available. Advanced investment strategies focusing on equity or debt are available with higher balances.
Read our Fundrise review to learn more.
Vinovest gives exposure to a fine wine portfolio with a $1,000 minimum investment. The bottles store in cellars across the world that you may hold for up to 30 years to earn maximum profit.
Read our Vinovest review to learn more about wine investing.
Worthy lets you invest in small business bonds and earn 5% interest. The minimum investment is $10 and you can sell at any time without fees or penalties.
Physical collateral backs each bond if the borrower defaults. However, these bonds can be riskier than investment-grade corporate and government bonds with a lower potential yield.
Many investors are looking for investment ideas that earn passive income without relying on the stock market. Yieldstreet is a legit way to build wealth from tangible assets but you will need to be an accredited investor to invest in any of their offerings.