Yieldstreet, the popular platform for alternative investments, can be a great place to find profitable opportunities to diversify your portfolio or simply invest your money in assets aside from stocks, bonds or cash. However, for those who aren’t accredited investors or who are looking for a wider range of alternative investments, Yieldstreet can feel too restrictive. If that’s the case, keep reading to learn a little more about alternative investing and some of the other platforms you can check out to find an opportunity that fits your needs and investment goals.
What is Yieldstreet?
Yieldstreet is an online platform where individual investors can find real estate, art, multi-asset funds and other alternative investment opportunities. When you sign up for an account, you’ll get access to a marketplace of unique offerings, all of which have been rigorously vetted by the Yieldstreet team.
For all that it offers, the key barrier to the platform is the fact that these offerings are generally only available to accredited investors. Accredited investors have to meet certain income and net worth criteria that are simply not practical for the average investor.
The platform does offer nonaccredited investors the opportunity to invest in the Yieldstreet Prism Fund, a multi-asset fund composed of a diverse range of assets spanning 6 asset classes. However, aside from this fund, there’s not much else nonaccredited investors can do on the platform. This is the major reason people look for alternatives to Yieldstreet that do provide regular investors with a way to participate more actively in the exciting and potentially lucrative alternative investments market.
Why Choose Alternative Investments?
While alternative investments can sometimes take more work and more due diligence to find the right opportunity, they continue to be a popular choice among a wide variety of investors. This is because they can offer a lot of benefits that conventional investments like stocks, bonds or cash simply can’t, namely:
- Lower volatility. Even if you’ve never traded on the stock market, you’ve no doubt heard about historic crashes or explosive bubbles that seem to grow beyond reason and then pop without warning. Tangible assets like real estate, farmland or companies don’t have that same volatility. While their value can certainly fluctuate, it’s a much more gradual process, giving you time to plan and prepare if you sense a decline coming.
- Direct ownership. With the exception of things like crowdfunding platforms or multiasset funds, many alternative investments involve directly buying or investing in a tangible asset that you then own in whole or in part with a few other investors. This gives you more decision-making power and control over how you manage and grow its value. It also means more of the profit generated by the asset goes directly to you.
- Consistent passive income. Some alternatives, most notably real estate, can provide relatively predictable passive income. When you buy a multiunit rental property, you’re able to collect rental income every month from each tenant — regardless of whether it’s a bear or bull market.
Who Benefits From Alternative Investments?
While the potential upsides of alternative investments sound attractive, they do often require a larger commitment from the investor, so they aren’t the best choice for someone who wants to put money in and forget about it. They’re a better pick for those who are interested in being more actively involved and who are comfortable with potentially not being able to pull their cash back out of the investment right away.
In some cases, the initial investment can be high. While you can start buying stocks with just a few bucks, you’ll need a hefty down payment and a long-term commitment to buy a rental property. Moreover, that cash you invest can sometimes be tied up for a long time. You can cash out your stocks whenever you like but pulling your money out of, say, an art collection requires taking the time to find 1 or more buyers.
Alternative investments can also take more of your time. Doing your due diligence at the beginning to make sure the startup you’re considering funding has what it takes to succeed or to vet that farmland you’re looking at flipping or renting takes a lot of research and decision making. Depending on the asset, you may also need to make time for it after you invest. When you buy a rental property, for example, you’ll have to take time out of your week to manage that property.
Because of the higher level of financial and time commitment required, alternative investments are usually best for those who like the idea of having a more hands-on role in their investments. Managing your rental property or using your art history expertise to build a phenomenal art collection can be incredibly rewarding — and yield great returns, of course.
It’s also recommended that you only invest as much cash into these alternatives as you can afford to not touch for a few years. Don’t pour your entire life savings into an illiquid asset. Make sure you have some cash set aside to cover unexpected events so that you’re not at risk of finding yourself in an emergency with all your cash tied up in property or another illiquid asset.
Benzinga's Best Alternative Investments
Whether you prefer more tangible assets or you’re just looking for some good alternatives to add healthy diversity to your portfolio, here are some of our favorite alternative investments:
Do Alternative Investments Track the Stock Market?
Because alternative investments tend to be tangible assets, their value tends to move independently of the stock market. This makes sense when you think about it. Whether the stock market is weak or strong today, the tenant living in the rental property you bought is still going to pay rent. So that asset is still generating a consistent return, regardless of how the S&P 500 is doing. Likewise, changes in the stock market won’t change the rarity or quality of that work of art you acquired and won’t impact the talent or ambition of the team behind that startup you invested in.
Some alternative investments even have an inverse relationship with the stock market. The most popular examples of this are precious metals and agricultural products. When stocks are down, assets like gold or corn go up. This makes them a powerful tool for hedging your portfolio against losses in bear markets. The increasing value of your precious metal or farm investments can help cover some or all of the decreasing value of your stocks.
Artivest
The Artivest platform is a place where investors can invest in hedge funds, private equity and other alternative assets that are typically not accessible by everyday investors. If you’ve ever dreamed of becoming a venture capitalist who’s always on the hunt for the next lucrative deal, this is the platform.
While it comes with many of the same restrictions as Yieldstreet — you need to be accredited or be a licensed financial adviser to access the offers — it’s an innovative and useful platform for those who meet the qualifications. The mission of the platform is to take as much of the headache out of alternative investing as possible. It does that by automating compliance processes and reporting so that you can invest without getting bogged down in red tape.
This automation also means that Artivest can make deals available at a lower minimum investment than you might see on similar platforms. So, if you meet the qualifications but you still aren’t willing to put up the high minimum investments you often see on private equity or hedge fund listings, Artivest is a great option to have.
Livestock Capital
Livestock Capital is sort of like crowdfunding but for cows (or sheep, or pigs — you get the idea). Investors can buy a real animal living on farms around the world. That investment money helps the farmer who’s actually doing the work of raising, feeding and selling that livestock. Then, at the end of the season (or the end of the term of the investment deal), the farmer buys the animal back from you at a higher price.
While it sounds a little unusual, it’s similar to peer-to-peer lending. You’re giving that farmer a loan to help raise a young calf to adulthood. When it matures, that farmer pays you back with interest.
Rally
Rally is a unique platform where investors can buy and sell shares of collectible assets in a way similar to buying and selling shares of stock. Essentially, Rally finds and acquires collectible assets like classic cars, sports cards and lots more. Then, it legally classifies that item as a “company” and sells shares of that “company” to investors on the platform.
This means investors can buy a share of that mint-condition Babe Ruth card, rather than forking over the cash to buy the card directly. You can then sell your shares of the card on periodic trading days prescheduled in the app.
What makes this platform so unique is the low barrier of entry. It’s so easy to use, and there are no investment minimums so you’re gaining access to alternative assets without the barriers you usually see on other platforms (like Yieldstreet).
Find Your Favorite Alternative Investment Opportunities Today
You don’t have to be an accredited investor with hundreds of thousands to invest to earn a profit in alternative investments. There are tons of platforms out there that can help you gain access to these unique opportunities — regardless of how much cash you can afford to put in. When you find something that piques your interest, be sure to check back at Benzinga to learn more about how you can make your favorite alternative investments work for you.
Frequently Asked Questions
What are the best alternative investments?
Real estate, particularly rental or commercial property, is a popular choice because it’s relatively stable and offers consistent returns. However, there are tons of great options out there and what works best for you really depends on your investment goals, your resources and your expertise.
Entrepreneurs with a strong background in business might do best with funding startups. Someone with an art history degree might be able to leverage that into a successful career of building an art collection.
Is Yieldstreet a good place to invest?
Yieldstreet offers a wide range of alternative assets to choose from, and investors on the platform benefit from the rigorous due diligence that the company does when vetting each listing it receives. So, it’s a great place to see promising, high-yield alternative investments. However, with few exceptions, you do need to be an accredited investor to actually take advantage of these offers, so it’s certainly not for everyone. Fortunately, there are alternatives out there that aren’t as restrictive.