Reward and Risk in Alternative Investments

To this day, high-yield bonds, as they are now more genteelly known, remain a brilliant innovation because they elegantly solve a simple yet ubiquitous problem: They give companies with less than stellar credit ratings access to capital. These bonds created and grew entire industries, such as wireless communications and cable television, just as they created and grew immense pools of wealth. Their invention combined with the packaging of credit card receivables, mortgage payments, and car loans into securitized products that loosened lending for individuals has done nothing less than bring about the democratization of finance.

“If we don’t change fundamentally how we save, invest, and actually make money as a society, there will be anarchy in 20 or 30 years,” he says.

Founded in 2015 by Mehere and two other Wall Street entrepreneurs, YieldStreet has allowed investors to put more than half a billion dollars into exotic debt securities. More than 80,000 people have signed up to receive its offering notices. Since inception, the investments have an expected internal rate of return of almost 13 percent and to date haven’t lost any principal. In the same period, the S&P 500 appreciated an annualized 9.3 percent. With many individual investors eager to juice their returns, some YieldStreet offerings sell out in seconds.

An accredited investor is a person or a business entity who is allowed to deal in securities that may not be registered with financial authorities. They are entitled to such privileged access if they satisfy one (or more) requirements regarding income, net worth, asset size, governance status or professional experience.

This all makes some people nervous, because what YieldStreet sells is unusual. Many of its offerings involve litigation finance, in which investors front money to law firms or plaintiffs hoping for a big settlement. More recently the company has moved into marine finance, allowing investors to participate in loans for cargo vessels that transport dry-bulk goods such as coal or grain. Or they could jump into a deal in which vessels are acquired and sold for scrap. Each offering is backed by collateral, but sometimes that’s a litigant’s contractual obligation to pay investors back-if there is a settlement-or the scrap value of a ship.

“The percentage of accredited investors for whom they are appropriate is quite small,” says Barbara Roper, director of investor protection at the Consumer Federation of America. “They like to make it sound like it’s populist,” she adds, “but this doesn’t belong anywhere in the portfolio of the typical retail investor.”

Reward and Risk in Alternative Investments
Explainer Video for Gap Analysis Trading

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Profitable Investing Tips

Profitable Investing Tips

ProfitableInvestingTips.com is an informational website for men and women who want to discover trading & investing products and strategies and how to use them.

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