Yieldstreet vs. P2P: What’s the Difference?

Peer-to-peer lending, commonly referred to as P2P, is an increasingly popular strategy among online investors. In recent years, platforms like Upstart and Prosper have brought the P2P lending model into the spotlight, and naturally many people just getting started on their investment journey might be curious as to what it’s all about, and how it differs from the asset-based alternative investment model of Yieldstreet.

Let’s take a closer look at the strategy and mechanisms behind P2P lending platforms, as well as how they compare to Yieldstreet, in order to help you decide which model might be the better fit for your individual portfolio.

What is P2P Lending?

P2P lending is an alternative method for acquiring or providing a loan, allowing borrowers to seek funding from individual investors rather than traditional financial institutions. For investors, P2P can be a great way to observe higher-than-usual returns on simple cash investments, and it can provide borrowers with access to loans that they might have difficulty securing from a conventional bank. 

Most P2P platforms share a similar overall model. Borrowers can sign-up and complete an online loan application, and after being approved and assigned an interest rate—typically based on an assessment of their credit history—they can review various offers from interested investors and ultimately receive their desired loan. Once the loan is accepted, borrowers are responsible for making incremental payments to satisfy the principal amount of the loan plus interest. 

Advantages and Risks of P2P Lending

Investing with a P2P platform has the advantage of producing relatively high returns when compared with other investments or traditional savings accounts, and investors could potentially observe returns exceeding 10%. P2P platforms also give investors control over how they invest their money, which can be advantageous for confident investors who want to diversify their portfolio while maintaining authorship over their individual strategy. And because P2P loans aren’t subject to the same ebbs and flows of publicly traded assets, they are considered less volatile than traditional investments in the stock market. 

However, because P2P investments are personal loans, there is always the possibility of a borrower defaulting or missing payments. And considering that many of these loans are unsecured, and the platforms aren’t covered by FDIC insurance, a default has the potential to be a large loss. 

How Does Yieldstreet Compare?

Rather than funding personal loans, Yieldstreet provides investors with a diverse array of alternative investment opportunities, from multi-asset funds to individual equity offerings in everything from commercial real estate to art and consumer finance. The main similarity between Yieldstreet and P2P lending platforms is that we both provide the everyday investor with an alternative method for income generation; the main difference is that returns on investments with Yieldstreet are based on the value and performance of assets, rather than the predetermined interest rates of P2P loans. Minimum investments in Yieldstreet offerings range from $500 to $15K, with target returns ranging from 10-18% on most offerings.* 

Diversify Your Portfolio Today

Advantages and Risks of Investing with Yieldstreet 

Investing with Yieldstreet comes with the advantage of built-in portfolio diversification via access to private, multi-asset class funds that were previously only available to the top 1%. Investing in a Yieldstreet fund is a great way to generate income over time, and the variety of offerings gives investors flexibility regarding their individual risk appetites. In the interest of inclusivity, Yieldstreet has options for both accredited and non-accredited investors, and while each opportunity comes with its own risk profile, Yieldstreet performs its own due diligence, providing investors with the transparency necessary to make an accurate assessment of all offerings.

Although Yieldstreet does offer limited liquidity on certain investments, our platform might not be the best choice for investors who aren’t prepared to wait out the full duration before redeeming their returns. Additionally, while each offering is carefully crafted to benefit investors, Yieldstreet’s available offerings might be limited in comparison to other, more traditional investment platforms.

Still curious as to what might be the better investment strategy for you? Try taking our short quiz to learn more about yourself and how you can get started on your investment portfolio.

*Target returns are offered as opinion and are not referenced to past performance.  Target returns are not guaranteed and actual events or results may differ materially.

How helpful is this content?

Was this content helpful?

Sign up with Yieldstreet and be the first to know about our latest offerings, recent news, upcoming events, and more.

Your email will never be shared and will only be used for Yieldstreet updates. Already a Yieldstreet member? You're already set up to be notified.

Share this article:

Sign up for Yieldstreet in 3 easy steps

Sign up with your email address

Securely verify your identity and link a bank account

Verify your accreditation (if applicable) to access all of Yieldstreet’s offerings.

The Yield

Our weekly podcast providing ideas about how to make money work for you and bring you closer to your dreams.

Since inception, over $2.2B has been invested on Yieldstreet

Join today for free to access alternative investment opportunities.

1 Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in significant losses.

3 "Annual interest" or "Annualized Return" represents an annual target rate of interest or annualized target return and "term" represents the estimated term of the investment. Such target interest or target returns and estimated term are projections of the interest or returns and or term and may ultimately not be achieved. Actual interest or returns and term may be materially different from such projections. This targeted interest or returns and estimated term are based on the underlying investments held by the applicable.

4 Reflects the annualized distribution rate that is calculated by taking the most recent quarterly distribution approved by the Fund's Board of Directors and dividing it by prior quarter-end NAV and annualizing it. The Fund’s distribution may exceed its earnings. Therefore, a portion of the Fund’s distribution may be a return of the money you originally invested and represent a return of capital to you for tax purposes.

5 Represents the sum of the interest accrued in the statement period plus the interest paid in the statement period.

6 The internal rate of return ("IRR") represents an average net realized IRR with respect to all matured investments weighted by the investment size of each individual investment, made by private investment vehicles managed by YieldStreet Management, LLC from July 1, 2015 through and including Dec 22th, 2021, after deduction of management fees and all other expenses charged to investments.

7 Investors should carefully consider the investment objectives, risks, charges and expenses of the Yieldstreet Prism Fund before investing. The prospectus for the Yieldstreet Prism Fund contains this and other information about the Fund and can be obtained by emailing [email protected] or by referring to www.yieldstreetprismfund.com. The prospectus should be read carefully before investing in the Fund. Investments in the Fund are not bank deposits (and thus not insured by the FDIC or by any other federal governmental agency) and are not guaranteed by Yieldstreet or any other party.

8 This tool is for informational purposes only. You should not construe any information provided here as investment advice or a recommendation, endorsement or solicitation to buy any securities offered on Yieldstreet. Yieldstreet is not a fiduciary by virtue of any person's use of or access to this tool. The information provided here is of a general nature and does not address the circumstances of any particular individual or entity. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of this information before making any decisions based on such information.

300 Park Avenue 15th Floor, New York, NY 10022

844-943-5378

No communication by YieldStreet Inc. or any of its affiliates (collectively, “Yieldstreet™”), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice. Nothing on this website is intended as an offer to extend credit, an offer to purchase or sell securities or a solicitation of any securities transaction.

Any financial projections or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. In addition, other financial metrics and calculations shown on the website (including amounts of principal and interest repaid) have not been independently verified or audited and may differ from the actual financial metrics and calculations for any investment, which are contained in the investors’ portfolios. Any investment information contained herein has been secured from sources that Yieldstreet believes are reliable, but we make no representations or warranties as to the accuracy of such information and accept no liability therefor.

Private placement investments are NOT bank deposits (and thus NOT insured by the FDIC or by any other federal governmental agency), are NOT guaranteed by Yieldstreet or any other party, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.

Investments in private placements are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest. Additionally, investors may receive illiquid and/or restricted securities that may be subject to holding period requirements and/or liquidity concerns. Investments in private placements are highly illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest.

Alternative investments should only be part of your overall investment portfolio. Further, the alternative investment portion of your portfolio should include a balanced portfolio of different alternative investments.

Articles or information from third-party media outside of this domain may discuss Yieldstreet or relate to information contained herein, but Yieldstreet does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party articles, do not constitute an approval or endorsement by Yieldstreet of the linked or reproduced content.

Investing in securities (the "Securities") listed on Yieldstreet™ pose risks, including but not limited to credit risk, interest rate risk, and the risk of losing some or all of the money you invest. Before investing you should: (1) conduct your own investigation and analysis; (2) carefully consider the investment and all related charges, expenses, uncertainties and risks, including all uncertainties and risks described in offering materials; and (3) consult with your own investment, tax, financial and legal advisors. Such Securities are only suitable for accredited investors who understand and willing and able to accept the high risks associated with private investments.

Investing in private placements requires long-term commitments, the ability to afford to lose the entire investment, and low liquidity needs. This website provides preliminary and general information about the Securities and is intended for initial reference purposes only. It does not summarize or compile all the applicable information. This website does not constitute an offer to sell or buy any securities. No offer or sale of any Securities will occur without the delivery of confidential offering materials and related documents. This information contained herein is qualified by and subject to more detailed information in the applicable offering materials. Yieldstreet™ is not registered as a broker-dealer. Yieldstreet™ does not make any representation or warranty to any prospective investor regarding the legality of an investment in any Yieldstreet Securities.

Banking services are provided by Evolve Bank & Trust, Member FDIC.

Investment advisory services are provided by YieldStreet Management, LLC, an investment advisor registered with the Securities and Exchange Commission.

Our site uses a third party service to match browser cookies to your mailing address. We then use another company to send special offers through the mail on our behalf. Our company never receives or stores any of this information and our third parties do not provide or sell this information to any other company or service.

Read full disclosure
Copyright © 2022 YieldStreet, Inc.