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Yieldstreet Review: Access to Crowdfunded Investments

Our review of Yieldstreet looks at the crowdfunded investment offerings and the costs for investors, whether accredited or non-accredited.

Diversification is important for managing risk as you build an investment portfolio.

If you're interested in investing in more than just stocks, bonds or mutual funds, you might consider Yieldstreet.

Yieldstreet is an online investing platform that specializes in crowdfunded investments -- allowing more people to invest in here include fine art and real estate.

Yieldstreet isn't in the same vein as traditional online brokerages.  But, it may be worth a look if you want to expand your investment horizons.

Before you open a brokerage account here, it's helpful to know more about how it works. This Yieldstreet review looks at what sets it apart from other investment platforms.

Yieldstreet is good for…

  • Investors who want to build a portfolio with more than just stocks
  • Individuals who want to explore the benefits of crowdfunded investments
  • People who have at least $5,000 to invest
  • Accredited and nonaccredited investors
  • Investors who are comfortable with a longer holding period

Yieldstreet Pros & Cons

Pros Cons
  • Diversify your portfolio with a wide range of alternative investments
  • Self-directed IRA option is available
  • Earn on interest on uninvested funds with Yieldstreet Wallet
  • Start investing in stock alternatives with as little as $1,000
  • The minimum investment for some offerings is $5,000 or higher
  • Nonaccredited investors are limited to a single investment option

Types of Accounts Offered

Yieldstreet is not your typical brokerage. In terms of the account types you can open, you're limited to:

  • Investment accounts
  • Self-directed Individual Retirement Accounts

There's no traditional, Roth IRA, or SEP IRA option. But, that's common with crowdfunding platforms.

You can open an investment account as an individual. But Yieldstreet also allows certain entities to open accounts, including:

  • Family offices
  • Trusts
  • Limited liability corporations

In case you're wondering if Yieldstreet is only for high net worth individuals, the answer is no. Yieldstreet is open to both accredited and nonaccredited investors.

You'll have to identify as one or the other to open an account. And you'll also have to verify your accredited investor status.

There are four ways to do that:

  • Submit a verification request through Yieldstreet to a third-party who's familiar with your finances and can validate your status, such as a CPA or attorney.
  • Provide your CRD number if you hold a Series 7, Series 65 or Series 82 license.
  • Qualify based on income.
  • Qualify based on net worth.

You'll need to show $200,000+ in annual income for the previous two years to qualify based on income. If you're married and file a joint tax return, the threshold goes up to $300,000.

To qualify based on net worth, the minimum threshold is $1 million. You can use bank statements and other financial records to verify net worth.

Now:

If you don't meet any of those requirements, you can still invest with Yieldstreet.

But as a nonaccredited investor, you won't have access to certain types of investments.

Are There Different Account Tiers?

Some online investment platforms offer multiple account tiers. For example, robo-advisors that charge an annual management fee can use a tiered approach.

The higher your balance, the less you pay in annual management fees. The lower your balance or tier, the higher the fee.

Yieldstreet doesn't tier its accounts. Instead, it makes the distinction between accredited and nonaccredited investor accounts.

That means:

The annual management fee you pay is the same, regardless of how much or how little you invest. The difference lies in what you can invest in.

We'll cover the costs of investing later as part of this Yieldstreet brokerage review.

Investment Options

If you're looking for more than stocks or mutual funds, you're in the right place with Yieldstreet.

Yieldstreet specializes in crowdfunded investment vehicles. Available asset classes include:

  • Art
  • Commercial finance
  • Consumer finance
  • Legal finance
  • Marine finance
  • Real estate

There are two ways to invest with Yieldstreet: the Prism fund or individual offerings.

Prism Fund

The Prism Fund is open to all investors, except those living in Nebraska or North Dakota.

This fund has flexible minimums starting at $1,000. It's also the only investment option for nonaccredited investors.

As far as what the fund invests in, it covers the asset classes listed earlier as well as corporate bonds.

This is an all-in-one diversification option with a low barrier to entry.

Individual offerings

Individual offerings are only available to accredited investors.

The minimum investment is typically $5,000, though some may require $10,000 or more.

Investing in individual offerings lets you build a custom portfolio, based on your risk tolerance and goals.

For example, you may only want to invest in real estate or art.

What's important to remember with the Prism Fund or individual offerings is that these are typically longer-term investments.

So if you're looking for something with a shorter holding period, Yieldstreet might not be right for you.

Management Fees: What's the Cost?

Any time you invest, it's important to pay attention to fees.

The more you pay in fees, the less of your earnings you get to keep. Since Yieldstreet charges an annual management fee, there are no commissions to worry about.

Here's what you'll pay to invest here:

  • Management fee: 1% to 2% annually

Yieldstreet's fee is higher than what you might pay to a robo-advisor like Betterment or Wealthfront.

But again, this is not your standard brokerage account.

In terms of returns, Yieldstreet attempts to return anywhere from 10% to 15% to its investors. So, paying a higher management fee may be justifiable for those kinds of returns.

But consider what you're comfortable paying to invest in stock alternatives.

Keep in mind also that individual investments on the platform may charge their own fees.

Online and Mobile Experience

Having online or mobile access to your investments can be invaluable. You can open an account with Yieldstreet online.

There are three steps involved:

  • Verify your identity
  • Link a bank account
  • Validate your accredited investor status

Once your account is open, you can manage it online or through the Yieldstreet mobile app.

Both are fairly easy to navigate, in terms of choosing and making investments.

The website has a helpful Resources section. You can use it to answer any questions you might have about how it works. And you can also go online to research and compare offerings.

Research and Investing Tools

Having access to investment research tools can be a boon if you're an active day trader. Things like stock tickers or technical analysis indicators can help with making investment decisions.

Since Yieldstreet focuses on crowdfunded investments, the research is already done for you.

The platform vets investments before making them available to investors. So, the due diligence has already been done.

You can read summaries of individual offerings and explore the Prism Fund. That can make it easier to decide where to put your money.

But if you're looking for advanced trading research and analysis tools, you won't find them here.

Should You Invest With Yieldstreet?

Yieldstreet is best suited for buy-and-hold investors. Crowdfunded investments are much less liquid compared to stocks or ETFs.

If you're an accredited investor, you might appreciate the range of individual offerings. And if you're a nonaccredited investor, the Prism Fund could open up new investment possibilities for you.

Perhaps the best thing about Yieldstreet is that it levels the playing field.

You can invest in things that were previously only available to hedge funds or institutional investors.

The promise of higher returns may be tempting but consider the risks involved. Crowdfunding is relatively new. There are no guarantees that you'll get your money back.

Also, keep the annual management fee in mind. If you're hoping to keep more of your investment returns, you may be better off with a robo-advisor that charges a lower fee.