Alternative investments can help you diversify your holdings while providing passive income. Here is our YieldStreet review to help you understand if the platform is right for you.
YieldStreet Review: Is It Legit or a Scam?
P2P lending and crowdfunding investment opportunities have provided the masses with alternative investment options that were only available to big investors previously. YieldStreet is one such platform. Let’s learn more in this detailed YieldStreet review.
Founded in 2015, YieldStreet is a platform where accredited investors get an option to place their money in a place other than the stock market.
What’s attractive about YieldStreet is that it gives high yields and gives out funds to aspiring projects and business organizations. However, as the P2P lending option is relatively new and prone to market risks, the question remains – is YieldStreet legit or a scam?
This YieldStreet review will extensively explore all the aspects of this platform, including potential risks and profit margin, to help you decide whether you should go for it or not.
Table of Contents
YieldStreet Review – What is YieldStreet?
Let’s start with the basics. Milind Mehere founded YieldStreet because, just like many other small-scale investors, the lack of investment options forced him to think of such an idea.
With YieldStreet, he aimed to provide safe, asset-backed, and highly profitable alternative investment options to individual investors.
If you’re not new to the investment market, you’ll know that such collateral-backed investments were only accessible to the extremely wealthy class in the past.
Today, platforms like YieldStreet connect investors to asset-backed investments, while raising fast, accessible capital for eligible projects.
It’s investment options vary across a wide range of investment classes, so you get to choose the area you want to invest in.
As the idea progressed, the number of crowdfunding platforms and P2P campaigns saw a staggering rise. All of them aimed to democratize the investment market and give the typical investor a fair chance. But, how can you figure out if YieldStreet is the perfect platform for you from the lot?
What makes this alternative platform stand out is the popularity and credentials it has bagged since 2015. It has been featured in leading investment magazines such as Forbes, Tech Crunch, and even The Wall Street Journal.
Besides that, it was named as the fastest-growing private company in the US by Inc. In 2018, at the Benzinga Global FinTech Awards, YieldStreet won the “Best Alternative Investment Platform” award. And why not?
The P2P crowdfunding platform has made about 396,000 payments to date and has given back about $398M to investors as investment returns.
After reviewing the platform closely, we found out that the secret of its excellence and reliability lies in its transparent investment policy.
YieldStreet Investment Policy and Investor Scrutiny
The investment policy for YieldStreet is created and managed by Micheal Weisz. He specializes in asset-based loan transactions.
Before YieldStreet, Weisz had worked as the vice-president of a New York-based credit hedge fund.
Here at YieldStreet, he formulated a policy that scrutinizes each investment project according to the following five points.
See Related: Alternative Investments 101
Asset-based Investments Only
Upon seeking funds from YieldStreet, the borrower has to present a verifiable asset to the company. The collateral can range from real estate to a vehicle, industrial equipment, or even a legal case.
Investments Should Have a Low Stock Market Correlation
The investment returns from YieldStreet will not follow the stock market. This makes it a safer, low-risk option as their returns will not be affected by the rise and fall of the stock market.
YieldStreet makes sure that every investment they make is managed by an expert team in that particular niche. This helps mitigate risk factors in your investments and startup returns.
Targets Short-Term Loans
Since most of YieldStreet’s investment is in loans, the platform targets loans that have short durations. This ranges from one to three-year loan terms. By using this strategy, the company can reinvest their funds and reduce investment risks as well.
8-15% Annual Returns
Investments at YieldStreet aim to get their investors an annual profit of about 8-15%.
YieldStreet performs its due diligence to each investor according to these five points. If the candidate does not meet all five points, the loan will not be approved.
YieldStreet Risk Management
All investments are subject to risk by nature. Even though YieldStreet cannot be proclaimed to be completely risk-free, there are a few factors by which the platform lowers the risk and protects its investors.
- Firstly, all loans are asset- or collateral-backed. In such cases, even if the borrower defaults on the repayment, your investment is safe.
- Secondly, YieldStreet carefully scrutinizes every candidate before working with them. Usually, they employ a dedicated third-party team to investigate every detail of the organization, including their financial record and reputation.
- Thirdly, they’re more likely to choose originators who have a certain level of experience in investment.
How to Sign Up for YieldStreet
If you’re intimidated by the policies and selection criteria by YieldStreet, you don’t need to be. The process for signing up on the platform is relatively straightforward, and with their online wallet, the funds will be accessible almost immediately.
All you have to do is select the signup button located on the top right corner on the homepage. After you’ve created your account, you can select from a variety of investment opportunities.
Once you’ve chosen an investment opportunity, you’ll have to enter the amount you wish to invest and start investing immediately.
The website has its online wallet system that helps you track and transfer your funds. If you select a pre-funded wallet, you’ll be able to manage your funds without further ado. Also, you can choose to delay the funding for up to two days if you don’t have any balance in your wallet.
If you don’t want to use the YieldStreet Wallet to transfer your funds, you can select wire transfer, or even link your account to your existing bank account.
YieldStreet Investment Options
As we’ve mentioned before, YieldStreet offers simple, asset-based investment alternatives free from stock market uncertainties. Besides that, the platform employs only qualified originators that bring in loans for multiple projects.
YieldStreet has a variety of investment options that you can choose from. Here’s a list of their principal investment categories to help you further understand their investment strategies.
Legal or litigation finance brings higher returns and lets their investors diversify their investment portfolios as well. However, only a few P2P platforms offer litigation finance. With YieldStreet, you can get lots of opportunities to invest in various legal settlement cases. These include Pre and Post settlement funding, law firm loans, and commercial litigation.
Marine finance is a high growth industry that provides earning opportunities for both lenders and borrowers.
With marine finance, you can take part in financing the construction of workboats, vessel acquisition for scraps, and trade finance as well.
Real Estate is a commonly targeting platform in the investment sector. This option has high returns combined with potential growth and financial security.
With YieldStreet, you can invest in diverse real-estate areas such as construction, infrastructure, and development.
See Related: Why You Want to Invest in Industrial Real Estate
YieldStreet keeps an eye on business activities that can benefit their investors in the long run. Thus, in the commercial section, you can select investment options with higher yields and growth potential.
The options for commercial financing at YieldStreet include SMB Lending, Purchase Order Financing, and Equipment Financing as well.
YieldStreet offers its investors with profitable financing opportunities in the art section. The platform has recently affiliated with the Athena Art Finance, a platform providing investment for collectors, museums, and art galleries.
It’s a new investment concept as compared to real estate or commercial finance. Still, YieldStreet has a team of expert art advisors and finance experts who ensure the credibility of art pieces and formulate the loans accordingly.
Is YieldStreet the Ideal Platform for You?
YieldStreet is ultimately an investment platform for seasoned, frequent investors. Even though the platform offers complete transparency on the risks involved in every investment opportunity, you need to have some prior knowledge to judge the offers accordingly. In the end, it’ll be you who faces the loss if you make a wrong decision.
Most importantly, YieldStreet offers investment opportunities only for investors who have at least $5,000 funding at hand.
Besides that, the platform has a requirement that every investor should have assets worth a minimum of $1 million. This amount should exclude the value of your current residence.
Furthermore, YieldStreet will also assess your annual income in the past two years. Your net income should be a minimum of $200,000 in two years. The only you can qualify as an investor with the platform.
While YieldStreet does aim to democratize the investment arena and provide opportunities to people outside the extremely wealthy class, this criteria is out of bounds for most people.
Simply, if you don’t make at least $100,000 a year, and are planning to invest less than $5,000, YieldStreet is not for you.
Also, investing in YieldStreet involves choosing your investment sector and investment opportunity. This requires a certain level of expertise, even after the details provided by the platform.
However, if you’re an experienced investor and have enough funds to meet the criteria, YieldStreet is a diverse and profitable platform for you, void of stock market risks and uncertainties.
See Related: Is Dividend Growth Investing Right for You?
YieldStreet charges a nominal fee for its investment services from its clients. Firstly, as a loan originator, you’ll have to pay a listing fee. After that, the platform will automatically charge 1-4% of your profits as a management fee.
The management fees are the basic charges for the work YieldStreet does for you. This includes finding safe investment options and listing them according to their sectors.
YieldStreet Review – Advantages And Disadvantages
When it comes to online investment platforms, there are always some pros and cons. The same goes for YieldStreet. Here’s a list to give you a clear representation of the benefits and drawbacks of the platform.
Pros of YieldStreet
Accessible Startup and Account Creation
Setting up an account to start investing is easy and time-saving. You can also wait after you set up an account until the ideal investment opportunity for you comes by.
YieldStreet offers annual yields of about 8-15%. This every investment opportunity you choose can turn out to be a high-yield investment and generate a steady income for you.
High Level of Transparency
YieldStreet provides a clear, detailed overview of each investment opportunity mentioned on its website. It maps out the complete terms, factors, and crucial information to help you make an informed decision.
Immune To Stock Market Fluctuations
For a seasoned investor who is tired of the stock market, YieldStreet is a refreshing and diverse platform. Also, the yields are not subject to the rise and fall of the stock market, and there’s complete security against borrower default as well.
YielldStreet has different policies regarding their payouts, depending on the amount invested. Some investments have monthly payouts, while others are paid quarterly. Some payments are cleared only when the borrower portfolio is settled.
See Related: How to Invest Small Amounts of Money
Cons of YieldStreet
Only Accredited Investors Can Participate
You cannot invest with YieldStreet if you do not qualify as an accredited investor.
High Minimum Investment Amount
You should at least be ready to invest $5,000 if you wish to invest with YieldStreet.
While YieldStreet does offer options outside the stock market, these options are limited and get taken up quickly.
Lack of Customer Support
The platform lacks communication with its investors. Sometimes, customers report that payouts turn up in their accounts without any prior notice.
New Business Model
Although YieldStreet hasn’t seen a major downturn since its advent in 2015, it is still a relatively new business model.
No Secondary Market
Once you invest with YieldStreet, your investment is tied up for that particular duration. The platform does not have secondary market options to invest your revenue further.
See Related: 10 Apps that Give Free Stocks
YieldStreet Review – Conclusion
YieldStreet is a great alternative investment platform if you’re an accredited investor looking for diverse investment opportunities. It uses a strict assessment policy before financing projects, and all its loans are backed with tangible assets that help reduce overall investment risk.
Besides that, for savvy investors, the platform has more enticing options outside the stock market and traditional real estate. Most importantly, it maintains transparency in all its investment options.
While no investment platform is perfect and risk-free, and YieldStreet has yet to stand the test of time, the platform provides a promising option for experienced investors.