It's been several weeks since I've provided an update on my investment returns from Prosper.com. There have been some developments like loan payoffs, some late payments coming into compliance, and some late payments getting...later.At a high level, here are the current statistics:
Loans: Active loans: 84
Principal loaned: $5,006.67
Avg. interest rate: 14.93%
Now, don't be deceived by the high average interest rate. There are late loans to consider of course, most of which have a decent likelihood of ultimately defaulting. As of now, there are 6 loans late at least 1 month or more. How does this translate into an overall annualized return? That's a complex question given the rolling loan initiation and varying degrees of payment at the time you write off a loan as "defaulted". In order to accommodate for this paradox, there are entire sites dedicated to tracking, trending and calculating returns for all active users in the Prosper.com community. Eric's Credit Community is viewed as a leading site for this purpose. According to Eric's CC, my adjusted annualized return (which considers the assumed current and future defaults subtracted from the starting average loan rate) is 8.25%.
So, the takeaway here is that there will be defaults; don't kid yourself. However, if you select a cohort of high yielding loans and maintain a single digit default rate, you can achieve non-market-correlated returns in line with the long term returns of the U.S. stock market. I started investing in Prosper.com close to a year ago. During that time period, the S&P has declined 5% and the Nasdaq 7%. So, if you're frustrated with the returns of late and the impending recession that's likely to impede progress any time soon, you should strongly consider Prosper.com as an investment class. I've posted prolifically about the system. Check out the attached link for all details or sign up now for a $25 signup bonus which expires within the next couple months.
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