Yieldstreet Review: Investment Opportunities for EverybodyOther Passive Income Ideas
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Financial literacy is a real problem with only 24 percent of millennials possessing the basic financial skills as defined by National Endowment for Financial Education. Most people commit serious money mistakes and they learn from their errors. Such an approach, however, could be quite costly. While investing is the way to go if you’re thinking about the future, underperformance and financial losses happen to be quite common. Various studies have been carried out and most of them reach the same conclusion – the vast majority of Americans is doing terribly in terms of investing effectively.
Fact: The average equity mutual fund investor underperformed the S&P 500 Index SPX, +0.15% by a margin of 4.7 percent, a Dalbar 2017 study shows. Fixed-income mutual fund investors have also underperformed and the reason for such issues has been pinpointed by financial experts. Most investors are guilty of buying high, overreacting to positive and negative trends, and exhibiting overall poor judgment. To address such troublesome trends, various companies have put together products aimed at increasing the effectiveness of investing.
Yieldstreet is one such product but does it work?
This review will give you a better idea about the concept, the nature of the investment, the safety of Yieldstreet, and the returns you could expect.
Let’s kick off the Yieldstreet review by answering the basic questions first. Yieldstreet is a platform aimed at giving investors access to high-yield, asset-based alternative investments.
Good to Know: According to the official presentation, Yieldstreet aims to create a portfolio across multiple asset classes – real estate, marine, commercial, and legal. As per the presentation, these opportunities are secured through assets, properties, settled and future case proceeds, and vessel acquisition. These supposedly allow for the creation of a diversified investment portfolio that’s fully backed by a certain type of collateral.
Yieldstreet announced that since its inauguration, it has made over 300,000 payments that returned more than 297 million dollars to the investors.
Various Yieldstreet reviews put emphasis on the fact that the platform achieves complete transparency. YieldStreet is the creation of Milind Mehere, who’s currently the platform’s CEO. Mehere is the person behind projects like Yodle and the SMB marketing company. Yieldstreet was inspired by Mehere’s frustration with the lack of investment opportunities beyond the realm of the stock market. This is how the idea for a high-yield, asset-based investment platform came into existence.
Other members of the Yieldstreet team include co-founder Michael Weisz (a former fund manager), and Dennis Shields (the founder of Esquire Bank).
It’s now time to take the Yieldstreet review to more specific details. When examining the best ways to invest, you need to focus on the starting amount, the risk, the specifics of the investment portfolio, and naturally –the return.
There are two requirements you need to meet in order to get started with Yieldstreet investment.
The first requirement is to have the minimum investment amount for the specific Yieldstreet offering. Minimums typically start at 1,000 to 5,000 dollars. The second requirement is for investor accreditation (since Yieldstreet operates under SEC regulations). Those who meet the criteria can begin investing.
Good to Know: All of the available Yieldstreet investments are based on the company’s five main guiding policies:
- The debt has to be asset-based.
- The investment should have little correlation to the stock market.
- Investment asset managers need to be highly experienced.
- A debt has to be short-term.
- The targeted return that the investment offers need to fall within the eight to 20 percent range.
You can easily scroll through the Yieldstreet investment offerings to see what the website features at the time being. Depending on the specific period, there may be a limited number of options to choose among.
Yieldstreet reviews 2020 are mainly positive and they shed light on the various investment options available.
Yieldstreet offers alternative investments. These are debt-based investment options that are secured via some kind of collateral. Thus, you will have access to loans that are backed by a tangible asset. There are three main types of investment – pre-settlement financing, real estate, and post-settlement financing.
This is essentially an advance to plaintiffs during legal proceedings. Pre-settlement financing usually occurs in the beginning of the legal process, before the two parties involved reach an agreement, and sign a settlement.
As the name suggests, this type of financing occurs after a legal case has been closed. Post-settlement financing occurs while the plaintiff is awaiting their recovery.
Opening your Yieldstreet account is free of charge. There is a management fee on all offerings. It ranges between one and four percent of the offering. An additional fee applies to the loan originator that will be listing on Yieldstreet. The target return is displayed on the website for all of the Yieldstreet offerings.
Each type of investment will determine what the payout frequency is going to be. There are two types of payment options – interest only, and interest and principal payments. Investors will receive either monthly or quarterly payment, depending on the specifics.
If the type of investment focuses on a pre-settlement advance, for example, the payment will be event-based. Some of the Yieldstreet reviews mention the fact that the platform isn’t doing a particularly good job in terms of announcing when an event has occurred. Investors did receive money in their bank account but there wasn’t an explanation as to why the payment took place. Thus, it has been verified that Yieldstreet generates returns on investment and that these returns are made available. Some slowness in terms of communication is present but chances are that the issue will be addressed in the future.
Pro Tip: The good news is that the frequency of payouts is announced on the individual offering and you will get some idea about what to anticipate in the future.
The Yieldstreet Prism Fund allows you to build a fixed-income portfolio, spread across multiple asset classes selected by Yieldstreet.
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Yieldstreet offers some unique types of investment, which makes the platform worth examining. Legal finance investment isn’t readily available through many other programs. Yieldstreet does conduct due diligence on all opportunities featured on the website. There is some information about an extensive filtering process, allowing a small portion of all suggested opportunities to actually make it to the Yieldstreet offerings.
Good to Know: Using Yieldstreet is relatively easy – the website is organized in convenient sections.
Creating your user account gives you a chance to take a better look at the offerings and the services being offered by the Yieldstreet team.
If you choose a pre-funded investment offering, you can start receiving returns within a few business days. This is a massive bonus that has drawn numerous investors to the platform.
Making an investment is easy. All you have to do is identify an opportunity and allocate a certain amount of your capital to it. Yieldstreet does the rest.
Yieldstreet reviews have pinpointed some website slowdowns and functionality issues that made using Yieldstreet a bit more challenging than it needs to be. Still, the platform is pretty straightforward.
Chances are that you will not face major challenges, even if you’re an unexperienced investor.
There are several great and unique things about Yieldstreet.
Do some online research and you’ll easily come across the stories of people who have generated great returns from Yieldstreet investments. As already mentioned, the company targets a ROI in the eight to 20 percent range. According to an official Yieldstreet announcement, already-financed investments are currently on track for a solid annual return of 12.6 percent.
Yieldstreet provides a great option for those who don’t believe that the stock market is their thing.
There are various kinds of borrowers with non-traditional funding needs. Yieldstreet makes it possible for such borrowers to “meet” investors who are looking for high-yield, alternative opportunities.
All Yieldstreet investment offerings are backed by collateral. The asset-based collaterals reduce the risk for investors significantly.
The team does a lot of hard work to go through the different offerings and identify the best ones.
Only a small portion of the offerings will make it to the Yieldstreet website. You can rest assured that you’re getting access to high quality investment opportunities worth paying attention to.
One of the things highlighted most vehemently by the Yieldstreet team is that investors have lost no principal on their investment.
Even if a loan goes sour, the Yieldstreet will work with the originator to compensate investors for as much of the principal and outstanding interest as possible. This happens due to the fact that the loans are secured through asset-based collateral.
Yieldstreet’s benefits are undeniable but there are also a few ways in which the platform misses the mark.
In comparison to traditional stock market investment options, the opportunities offered at Yieldstreet are illiquid and tied to the lifespan of the project.
The company provides detailed information about the duration of each project – as already mentioned, transparency is a primary concern. Projects range from a few months to a few years in duration.
Anyone who’s in need of immediate return should explore alternative options.
Some of the Yieldstreet reviews focus on the high management fees. A commission will have to be paid for the management of each investment project. The fees are ongoing and they can add up to a significant sum over time.
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Investment Minimums$1000 - $5000
Durations6 months - 5 years
Yieldstreet has many merits. It is a legitimate investment opportunity.
The Yieldstreet team works hard to identify the best investment offerings that produce a high yield. Getting started is also easy, as long as you meet the Yieldstreet qualification requirements.
Is Yieldstreet safe? The answer depends on how you perceive risk and what your tolerance is.
The investment risk varies from one offering to another. While loans are backed by collaterals, there isn’t a yield guarantee. Yieldstreet is an excellent option but it’s probably not the best investment portal for newbies in the field.
Those who already have some experience and who are looking for diversified investment opportunities will most likely appreciate what Yieldstreet has to offer.
Do you have some experience with investment in the legal field or with Yieldstreet? How much did you make through participation in the platform?
Don’t hesitate to share your Yieldstreet experience with us in the comments below.
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Logan is a practicing CPA, Certified Student Loan Professional, and founder of Money Done Right, which he launched in 2017. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.