Loan Payments So Far So Good

Earlier this month I was reading a post from a guy a few years ago who decided to stop investing at Prosper because his returns were better than a bank, but not what he expected.  He thought that for the risk he was taking, he should be getting better than 8%.  He related that he was disappointed at the number of people who had defaulted on their loans which caused his overall return to drop.  Keep in mind that even after all the defaults his return was around 8%.

There are a lot of people who would be happy with a return of 7% or more.  Still, I am striving for more and looking for ways to invest in people and still get a good or even great return.

While I am definitely new to loaning dinero at Prosper, I have not yet had anyone stop paying on a loan.  If this trend continues I will be receiving much more than 8% on my money.

You have the option to look at each loan individually and decide to take a risk on a real person instead of simply going by the numbers.  I do not mean to say that the numbers mean nothing, but they are only one factor.  This is the method I choose as I am of the opinion that this will increase my skill of making profitable loans over time.

As of this morning I have received payments of 1.12, .18, .91, 2.29, 1.05, .91, 1.08, 1.01, 1.10, .22, 1.10, .98 and one complete repayment of 26.06.  There are also 5 more payments in process, which I assume means that these payments have left the financial institution of the borrower and are somewhere in between there and my account at Prosper.  I encourage you to invest in people by loaning to them.

In my back office at Prosper the line that reads Gain/Loss to date equals 5.53.

All numbers above are in dollars and cents.


If I can do this, so can you.  Keep in mind that you could lose money.  I hope you don't. 

I am currently in the black.


 Click here or on the title of this post to visit Prosper.com and find out more about how to make a profit loaning money to real people.

What Were You Doing Two Years Ago?

While this blog is new, I have been blogging at theBigManWalking.blogspot.com for nearly two years.  I encourage you and everyone to get more exercise.  Start with walking if that's where you're at.  Here's an edited entry from early January, 2008:

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I feel better already. I decided to get moving in 2008 and from January 1-5 I've done over 12 miles total. I've been wearing a pedometer since last summer. If you've never worn a pedometer, you can get used to it. It's second nature to me now. I remember to put it on my belt 90% of the time or more.

I recommend recording your progress every day, which I started doing in 2008.  I find daily records help inspire me.

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By looking back I am reminded that I need to go get a pedometer again.  I have gotten out of the habit and I am now reminded of how much it helps. 

We can also learn about our financial outlook by looking back a couple years.  What were you doing that was working two years ago?  What were you doing that didn't work out?  Did you learn from it?  Was it a systemic problem or just a small (or big) glitch?

As we look to the future, what criteria do we use for investments?  If I am loaning people money and expecting a good return,  do I have a method that allows me to pick better candidates with a larger reward for the risk involved?  Am I satisfied with less because I see myself as doing some good?  Will that be o.k. with me in the future?

Interesting questions...

Click on the title of this post to learn more about Prosper.com.

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"You Choose Who Gets Your Money"

There are lots of borrowers to choose from on Prosper.com.  You choose who gets your loan of $25 or more.  The borrowers are rated by Prosper and you can decide what level of risk is within your comfort zone. I choose to take on higher risk borrowers and we'll see what happens.  I'll share some facts about my first Prosper loan recipient in today's post.

My first borrower's loan originated on October 28, 2009. I purchased $25 of his loan on 10/27 - 1 day earlier. There were less than 40 lenders who had successful bids.  The borrower is paying 35% and all the lenders receive the same rate - 34%.  (As far as I understand the bidding process, all lenders receive the same rate on all Prosper loans).  The 1% difference goes to Prosper.  This loan is the borrower's second at Prosper.com and he has made 24 payments on the first one to reduce his amount owed from $2,000 to below $900.  All his payments have been on time.

This borrower is listed as military enlisted, a full-time employee with over 20 years at his employer.  The site allows for personal statements by the borrower and in his he says, "I always pay my bills no matter what."  I know that a lot of people appreciate blunt statements like this.

Prosper rates this loan in what many would consider a very, very risky category.  They estimate that loans like this will not be paid back 25% of the time.  Because of his personal statement and the fact the he is long-term military, I decided to take a chance.

Keep in mind that when you bid, you might say that you are willing to accept 17% interest, but if all the lenders together only bid the loan down so far, or not at all, then you will receive the interest rate that everyone else receives.  In this case, that is 34%.  Many would say that that rate is fair given the high risk rating he has received.  Until I am proven wrong, I will look at this as receiving a very generous interest rate from a military man who has given us his personal assurance that he always pays his bills "no matter what". His track record with Prosper backs that up.