Prosper.com Results for 2010 and 2011

I recently posted my results from Prosper.com which hold micro loans from 2009, 2010 and 2011.  I also posted a bunch of links on Prosper.com I had found interesting.  Based on feedback from a commenter, here is a more recent list of links:

  • Prosper.com Official comments on 2006 loans (January 2010) – Basically an open letter on Prosper’s blog that argues against The Big Money article on Prosper.com that claims “39% to 54%” losses.  This has a great chart that shows the drastic improvements in loans originating in Q3 2009 (which is about when I got started).
  • Prosper.com Comments from Report Your Complaint.com (June 2010) – Not a happy customer and the commenter’s are pretty negative as well.  No comment though on the years and types of loans they were investing in.  I will note, I have a feeling a lot of people invested heavily in C, D and E loans.
  • Prosper.com Boasts of Lower Loan Loss Rates (September. 2010) – Summary of a press release and results in the next bullet.
  • Prosper.com actual results (all loans) from July 2009 to June 2010 – (June 2010) – This is a really good breakdown and essentially shows an average return of 10.43% (almost exactly what I am seeing on my portfolio).
  • Prosper.com Results for 2007-2010 loans (Nov. 2010) – This person posted his full term results for loans originating in 2007 and reinvested through 2010.  He only saw a return of about 1%.  However I will note, he didn’t diversify enough IMO (investing 5% of his capital into each loan) and he focused too heavily on lower quality borrowers with 30% invested in E or lower and 45% in A or higher.
  • Prosper.org – Prosper.com / LendingClub.com Forum and Community (Active) – Ran across this, looks like a really good community, wiki and more.  The forum has a recent post with people providing their ROI, if you want recent results you are looking for “post quiet period results” (June 2009).  Here are two I found: 15.8%, 8.43%.  Results with an average age of 300-400 days will show you loans originating in 2009 after the quiet period. On portfolios with average ages of 800-1000 days you will see the returns are much lower, usually 1-4%
  • LendStats.com (Current) – Probably the single best place for real-time up-to-date stats on most P2P lending sites.

After looking at more recent results and figures, I think it is obvious that loan quality definitely improved after June of 2009 quiet period and re-launch.  Of course so did the overall economy.  Finally, it is very important to diversify your portfolio.  Since I started with an initial $2000 investment, I have never invested more than 2% of my total portfolio in any one loan.  Most of the reviews I have read are from people that are investing 5%, 10% even 20% of their capital in individual loans and they are upset with poor results.  This is just nuts.  With 5-20% of your capital in a single loan, one or two defaults can wipe out all the interest you have gotten and one or two more can give you negative returns.  My advice, if you are only going to invest $1000 or $2000, limit yourself to NO MORE than $25 per loan; no matter the score.  A big mistake is to say put $25 in a bunch of E loans and then $100 in a AA loan thinking it is “safe”.  You could get lucky, but the interest in the AA loan won’t offset the losses in the E loans and if the AA loan defaults your screwed.

Cheers,

invest, investor, investing, lending

This posting is provided “AS IS” with no warranties, and confers no rights.

Buy gold online - quickly, safely and at low prices

Comments are currently closed.