High yields? Great. Subpar yields? Forgiveable.
Complete defaults leading to total loss of investment? Now that’s something I’d have to think about. And it’s not like I would completely dismiss it as a possible opportunity. Far from it. I’d just have to know that the potential for an extremely high return on investment is there and reasonably plausible.
In this review, we’ll be talking about mostly the controversial points of this platform and whether any of the claims are founded in truth or just a bunch of complainy pants wanting to be heard.
Let’s get to it, but first, what is Yieldstreet?
What is Yieldstreet?
Personally, I first heard about Yieldstreet through an ad while perusing my Mint account. Upon visiting their website, we find that Yieldstreet is the “leading platform for private market investing.” What does that mean, exactly? Well, it basically means that anything that can be considered investable is up for grabs. For Yieldstreet, real estate makes up over half of their investable asset classes. However, they have tons of other assets to choose from, including venture capital, crypto, exotic cars, artwork, supply chain financing, private credit, etc. They advertise that some of these investments are typically reserved for the top 1% of net worth individuals, but that through their platform, you too can now partake in such investments that the rich enjoy. You can expect to get 3-15% annualized dividends paid out on a monthly basis.
The founder and CEO of Yieldstreet, Milind Mehere, founded the company in 2014 and believes that alpha is disappearing from the stock market due to index funds and robo-investment platforms. He believes that there should be an eventual shift to private markets in one’s portfolio, and set out to build Yieldstreet to allow investors to do so.
One thing to note is that Yieldstreet is what one would classify as an alternative investment platform. Investors should only be investing in such assets once and only once they’ve maximized their tax-advantaged accounts. Investing on Yieldstreet should only be done with extra money that you can afford to lose, as it tends to be a much riskier proposition than your typical stock, bond, or real estate investments.
What makes Yieldstreet unique and surprisingly complex to participate in?
Yieldstreet is unique in the number of different offerings they have for you to invest in. However, the turnover is often unusually so quick that it seems quite impossible to have done thorough diligence on any single investment opportunity prior to getting into it. You’re mostly going to have to trust their own in-house team of experts. On their homepage, they showcase some of their team of 30+ investment analysts, claiming that they reject upwards of 90% of the opportunities pitched to them.
What are some cons of Yieldstreet?
There are a few ongoing concerns with the way Yieldstreet is operated. They are:
- Opportunities that involve foreign nationals
- The number of investments that go into default
- The way they report their default stats
Ideally, the vetting process that each opportunity undergoes through Yieldstreet’s team of professional analysts should take care of it all. Sure, some bad apples may get through, but overall, it wouldn’t be a problem assuming the proper due diligence is done. However, the reason why taking on any projects that are spearheaded by foreign nationals doing business in the US is risky is because the off-shore company can default and whatever money and assets are left can simply be taken out of foreign jurisdiction. It is then up to the foreign country whether or not it is worth their time to pursue such cases. More often than not, nothing will be done.
The second and third listed concerns correlate with each other, and make it hard to get a truly transparent picture of Yieldstreet’s success rate. The problem with the way Yieldstreet reports defaults is that they seem to be trying to intentionally obscure the default rate. Sometimes, a defaulted project will just be left as an open, ongoing project. Some projects are then finally listed as default, but several months later. Nothing is reported in an accurate timely manner.
Is this simply to keep their stats looking good? Possibly.
The last concern, communication, is what takes the cake for a lot of investors. Issues can occur with investments. And investors understand that there can be complications involved, especially since each Yieldstreet opportunity is unique in their own ways. However, when a payment doesn’t occur or is delayed, it would be nice to understand why, and investors aren’t getting answers when something doesn’t occur when it’s supposed to. That can be very frustrating, and understandably, some investors can feel like they’re getting scammed when they’re left in the dark.
Can you lose money with Yieldstreet?
Absolutely. Doesn’t mean you will, but you absolutely can go into the negative with your investments. Possibly even wiped out. That is the risk you take especially with alternative investments. However, the allure of it all is potentially outsized returns for your risk.
Is Yieldstreet worth it?
At the moment, there are some ongoing controversies online regarding the company Yieldstreet, including some impending investor lawsuits. Additionally, the SEC has launched an investigation regarding several loans that have disappeared unaccounted for. Transparency seems to be a huge issue with the company, as well as lack of communication when it comes to individual investment offerings. Check out some of these experiences below:
- One investor put money into a Yieldstreet offering, only to find out it had failed completely. However, when going back to the website to review the records, there was no indication that the investment had failed in any way. This is cause for concern especially for new investors who are unable to review Yieldstreet’s track record accurately in any way.
- Another investor had been invested in 5 separate investments through Yieldstreet and all 5 went into default, again with no indication that any of them failed upon review of the records.
- One last investor who dabbled in marine financing was involved in multiple individual offerings with Yieldstreet, only to find out all of the offerings were backed by the same single borrower. This raises issue regarding fraud, lack of transparency, and lack of due diligence.
These are just a few of the problems you’ll find online regarding working with Yieldstreet. All in all, for the above reasons and more, we’d hold off on investing on their platform. At least until the SEC investigation or investor lawsuits come to a definitive conclusion.