Posted by Financial Samurai 62 Comments. InI finally decided to invest some money into P2P lending with Prosper to see what the fuss was all about. I also ended up buying another house, so I only invested several thousand in P2P lending as a result, and basically ignored the account for much of the year until now.

As a result, I pretty much invested in A and AA Prosper Rating borrowers along with several B Ratings to get some juice. My P2P lending portfolio: Five AA notes up front, two A notes two months later, and then four more 2 AA, 1 A, 1 B after six months.

Most recently, I added an additional four notes 1 AA, 1 A, 2 B. You can see several of the loans have already been paid in full. Prosper and Lending Club recommend investing in more than notes for diversification purposes, but I only have several thousand bucks currently invested in high rating notes. I understand everybody runs into hardships and needs money sometimes.

Credit card debt is especially prevalent for P2P borrowers. I think it is absolutely absurd that credit card companies can get away with charging 10X the risk free rate. It feels good to help borrowers save money. Here are some tips from my experience investing with Prosper. Your eligibility to be an investor depends on your state of residence, and sometimes your income too. Not all states are created equal. So, I had cash just sitting in my account for months that I should have immediately redeployed.

If you have the cash flow, automating is a great way to go. Once you invest in notes that become fully funded and active, borrowers will start making scheduled payments every month that will be deposited into your account. You can then use that cash to invest in more notes or withdraw if needed. There are certain requirements you have to meet in order to be eligible to be a lender with Prosper.

Prosper Borrowers however, are eligible to apply in every state except for Iowa, Maine, and North Dakota. Net worth excludes home, home furnishings, and automobiles. I plan on doubling my account size with my next deposit this month and consistently contributing to my account every month for the next year. Right now I only have 12 notes that are active three were already paid off well in advance of the loan maturity date.

My bogie return is X the year yield. P2P lending hits the sweet spot. Prosper sent a message to investors saying they overstated returns over the past several quarters. Manage Your Finances In One Place: One of the best way to become financially independent and protect yourself is to get a handle on your finances by signing up with Personal Capital.

They are a free online platform which aggregates all your financial accounts in one place so you can see where you can optimize your money. Now, I can just log into Personal Capital to see how all my accounts are doing, including my net worth. There is no better financial tool online that has helped me more to achieve financial freedom. It only takes a minute to sign up. Finally, they recently launched their amazing Retirement Planning Calculator that pulls in your real data and runs a Monte Carlo simulation to give you deep insights into your financial future.

Personal Capital is free, and less than one minute to sign up. Sam started Financial Samurai in during the depths of the financial crisis as a way to make sense of all the chaos. After 13 years of working in finance, Sam decided to retire in to utilize everything he learned in the business to help people achieve financial freedom sooner, rather than later.

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December 11, at 5: They advise a minimum of to to avoid any losses based on their statistical history. Having only crossed the ten month mark on some of my first notes at this point, my I use quick-investing, so that anything meeting my criteria is invested as it becomes available each day, if there is cash sitting in my account so no babysitting my money.

My requirements are debt consolidation no business loans, weddings, vacations, home remodeling, or other crapa good chunk of credit history, no dings in last decade, little debt to income, etc.

December 11, at 7: This year has been more or less a test for me to see:. My main goal is to beat the year risk free rate by X in as conservative an investment vehicle as possible. I hope every reader does the same and can find benefit from my thoroughness as well. December 12, at 3: Did anyone here invest in the LC IPO? I was tempted and now realize I could have made a quick buck and got out but got scared off by their financials.

December 13, at 8: As both an insider and on the open market. I am still holding on to both…greedy I know. January 18, at 7: Debt consolidation makes the most sense but is there anything that prevents someone trying to buy a boat to list the reason for the loan as debt consolidation? I guess one thing that can be done is to check the revolving credit balance to see if they even have debt.

Glad you posted on P2P Lending. Have you considered investing in Lending Club? What about stock in them. I see an IPO as an EXIT for many smart investors. Sam, Offering credit card loan consolidation is an incredible service. People struggle all of the time to provide for their families. With lower wages and the de facto part time job this has become very difficult. Often they rely on credit cards to get through these times only to be taken advantage of by the banks.

Empowering people, improving lives and taking profits away from loan sharks my favorite part. Credit card debt is a HUGE problem partly because they are so easy to get and the interest rates are so damn high. It feels much better investing to help someone, or many people directly lower their debt payments.

This is a powerful reason for being a lender in P2P. December 11, at 6: Have put in and taken some outbut running roughly a 11k portfolio since starting in mid By my estimate, if those had been 25 instead of 50 and notes, my return would be north of 8.

I recently opened up an IRA with Lending Club since I really wanted to gain some advantages of deferring the significant taxes resulting from the interest income. For taxable accounts, the biggest benefit, in my opinion, is the level of liquidity.

Looking forward to seeing how the systems mature for borrowers, investors, and how the regulatory landscape may evolve. December 11, at 8: Sam, I have been curious about P2P lending for some time.

Your article has again piqued my interest. But as I was browsing recent articles, I have found a few that have commented on institutional investors participating on these platforms—with the implication that they get preferential treatment.

From the New York Times: How do you feel about this? Has it become harder to build a good portfolio? December 11, at 9: Bigger money ALWAYS gets a better deal preference. And if you want to get that preference, then the only way is to invest in institutional investor funds. We have equal treatment available to us that institutional investors have. There are third-party services that allow you first in line with investing, which is available to the big man and little man.

On the other hand, during the recession, I bought a non-performing loan secured by an industrial property from a lender, started the foreclosure process knowing there is significant equity in the propertythen the borrower reinstated and has been on time ever since I use a servicing company to process the payments now.

These and similar secured notes are awesome. However, I can not get my head around unsecured lending. I think I mentioned this to you before, Sam: I have been doing P2P taxes since Everytime I just write off the losses as capital gains. It is definitely not tax-friendly. It all gets added to your income and you get taxed on everything. Do you know if people can consolidate student loan debt using a peer to peer source?

My friend has over 50K in student loan debt some goverment and some private. Could she use a peer to peer source to lower her interest payment and consolidate? December 11, at The most you can borrow is 35,00, and the loan duration is is either 3 years or 5. If you consolidate, you will may have a much shorter pay back period, which would increase the monthly payments.

P2P lending is basically a personal loan and you can use the money for pretty much anything. You can consolidate anything on LC or Prosper but may run into into maximums in the amount they will lend.

Check out Sofi for student loans, but if your rates are decent they may not do better. Investing for a bit of a year on Lending Club.

I avoid high inquiries in general and any past delinquencies of bankruptcies. I also avoid the secondary note market, activity their seems fishy to me, bought loans that looked good but seller knew they would be paid off somehow, lowering my return. So far just doing it for fun.

Should I Invest In P2P Lending? Prosper Performance Review | Financial Samurai

Fortunately I live in California so I can, and the requirements are reasonable. I find P2P more interesting diablo 3 ros trading system stock investing personally, and Prosper is also in my back yard which is cool.

Any idea whether residents of states like Texas can invest in P2P via secondary market transactions? Looking at p2p, it just seems like a lot of work for the sake of diversifying…. Hindsight is so clear. Furthermore, I asked several people who invested during that australian livestock market association period and they also did not lose money.

The gain or loss is then divided by the average daily amount of principal outstanding to get a simple rate of government regulatory forex trading. This rate is annualized by dividing by the dollar weighted average Note age of your portfolio in days and multiplying by Lender Promotion Returns include any lender promotional payments you may have received from Prosper funding LLC or Prosper Marketplace, Inc.

Total Returns are the sum of Annualized Returns and Lender Promotion Returns. All calculations exclude Notes bought or sold on Folio. Some trading strategies will result in a significantly different overall return-on-investment than presented here.

These calculations include Notes issued and sold by Best automated forex trading platform Funding LLC and Prosper Marketplace, Inc. These calculations are likely to change in the future. Diversification is an important component of any portfolio, and Prosper recommends that investors have at least Notes in their portfolio to safeguard their returns against individual losses.

Note that Lender Promotion Returns are not included in the Actual Returns calculation presented on our website. Jeremy Noel Johnson says. I love Prosper and its automated investing system. So far, returns are at about I have a large amount of my cash in Prosper right p2p lending vs stock market, and my biggest selling point for its automated quick invest is that I am now working 0 hours per month at it and earning money.

December 11, at 4: The auto feature is pretty sweet though for larger investors. December 12, at 8: I not Lending Club recently changed their bands, basically offering lower returns for their same perceived risk level. I have been using LendingClub for almost 2 years now. I am very happy with the returns. I had a good chunk of loans in C,D,E,F.

Peer-to-peer lending - Wikipedia

My criteria is very strict when it comes to the higher risk loans, therefore I tend not gold investment options in india find what I am looking for, but I am always constantly checking and checking, they eventually appear during the week.

But funny thing is those folks in the higher risk category tended to pay off the loans well before they were fully due. I have had 2 loans go into default, my account size is about loans total, I invest the minimum 25 dollars each always. There are a few websites like Lendacademy that has posted some very interesting data, basically it showed the risk vs reward from an A loan or D,E,F loan.

The D,E,F loans did not default as much as one would think compared to the A loans based on historical data ing retirement plans investment options places non ccpc stock options LC and Prosper, there are quite a few good forums and blogs that have a lot more information out there.

I reinvest all earnings as they come in and every few months or so, I may throw in a few hundred extra. And I would like to see my overall results at around my 3 year mark when most my loans that were bought first should be fully paid off by then. I am not sure how prosper does it, but on lendingClub there is two options for notes… there are plenty of 36 month ones which mostly range from the A to D area, the more higher risk ones tend can you make money selling soy candles be 60 month loans, some higher risk ones you can maybe find at 36 months but those seem to be rare or might not meet your criteria.

As a LendingClub lender, we were offered pre IPO shares using the Direct Share Program that Lendingclub set up prior to launch of its IPO. The max requested shares was which I requested, but received only. I believe in this market and I believe there will be room for more growth and other players will get involved in this area. I have never had the chance to buy shares at the IPO price, and since I like this company and what it is about.

Another strategy that I use to minimize losses is selling loans on the secondary market. If a loan goes in to grace period, a loan is paid but was not paid on time. I immediately put it up for sale on FolioFN which LendingClub uses to allow you to sell your loans and allows other LendingClub members to buy up secondary loans. I usually price them for the remaining balance, some times a bit less or even a bit higher if there is still quite a few payments to be made. Most of the time they get sold quickly if they are priced well and fairly.

I have had to do this several times as I do not give a chance to borrowers who are late or in grace period, its worked out quite well. This process is rather quick, a few clicks and they are up for sale. I have not grafici forex online to use the automatic re investment thing LC has. Since my account is rather small, it is not so time consuming to use my filters and glance a few loans and pick them and be done.

I imagine guys with huge accounts that are getting s or more in payments per month then it could be useful to automate the process of choosing loans. December 12, at Sell half, and let the other half ride?

I wonder how many new millionaires the IPO created. At least several hundred right here in the SF Bay Area, who I presume will look to deploy the profits by buying real assets like property after fast way to earn gold wow lockup period is over. I started in I like both platforms but I Lending Club has a larger selection of loans and makes it easier to diversify large sums of money quickly. I definitely diversified here and did not ever buy whole loans.

I did not start investing heavily until early this year, so the returns are still due to change. My return is We will see years down the road.

They are all in taxable accounts because I plan to use this passive income to replace my active income and retire one day like Sam!

Brian Stocks and Cents says. December 12, at 9: Instead of working off of credit reports, scores, and other habits gleaned from self provided information and the credit bureaus, I have decided to utilize my everyday job skills as a syndicator to purchase aged notes on FolioFN.

In particular, I purchase notes that meet the following qualifications: They must have half the original term left or less 2. They must never have been late on a payment on the note. Not even a few days late. The note must have a yield to maturity of at least So far, this strategy has panned out well for me.

A lot of people want to see more liquidity in their notes and frequently sell either because they do not have the stomach for the timeline or they just need the cash. But overall, a lot of people out there honor their contracts and pay their debts. You just have to find the right ones. I have P2P and will be moving to NC in June I am not able to invest anymore???

Wondering why some states are excluded in their business plan? Here is a somewhat dated article that discusses the problem: Here is a more recent article, from last year: When this does happen and Lending Club has an IPO TechCrunchthe so-called blue sky exemption will happen, and all the states should open to the public for investors.

Since that IPO did just happen, then perhaps there will be news stock market scams this front in the near future. I did check their website today, and the approved State list still exists. One additional thought that occurs to me: If they get instant access to a bigger market, then that could justify a big IPO jump. My ROI is 7. There will be a bunch of defaults if the economy heads south.

The risk seems too high for me. December 14, at 7: I understand you are going after prime borrowers, but such concentrated risk! With Prosper specifically, I invest in C, D, and E loans. The bulk of my loans perth city public holiday opening hours C loans and my criteria focuses on high income earners with two-years or greater of employment, and no public records.

I only invest in three-year notes in Prosper. December 15, at What can I say. I like to live dangerously. How has the C,D, and E loans done for you? December 16, at 7: With an average yield although it is declining as underwriting changes of about You should give it a bigger shot. Melissa Sunburnt Saver says.

December 17, at 8: What the crap is that?! I already hated AZ… now I hate it even more… grr!

Sweet write up though. December 19, at 6: Melissa, I had another reply that is apparently still being reviewed, or failed, as it included external links but one benefit of LC going public is that they will become available in all 50 states. It is also an interesting aspect for investors in the company—they have an immediate boost in their addressable market.

January 4, at 6: Sam… Thanks for your review of P2P investing with Prosper. I have become a big fan of P2P. I started with a small amount last September a few thousand to get my feet wet and test the waters. The big surprise was that I only had five defaults using A,B,C and a few D loans. I am very happy indeed. I use my own set of filters with automatic settings that yield about possible loans each day.

Generally, I spend about minutes a day around 9AM and 5PM when I have the internet available. These more unpredictable and speculative stocks come with a great deal of noise and drama, with the world coming to an end one month, and then rising towards the heavens the next as featured in the story of oil this past month.

In contrast, P2P is so smooth, dependable, and predictable …almost boring. Just money pouring forth every few days into my account. No screaming, no posturing, no bravado. If only I was age 30 the compounding effect would be incredible! Prosper, IMHO, has yielded to the corporate set as a means of providing stability to the company in this very young market. It seems the corporations and big money interests siphon off the highest quality most secure loans while the few remaining glide towards the individual investor.

I am not complaining, just pointing out that it takes patience and time to build up a decent portfolio of loans to provide enough interest for passive income in retirement. A far cry from my savings account return of 0.

I recommend P2P investing as a means of providing diversification to an investment portfolio. January 5, at 8: January 5, at 9: Or you can set your filters specifically to only show you the top loans per day and have that automatically invest.

What you and I consider as top loans, however, is debatable. March 7, at 7: Propser seems to have changed in the last year. I was doing good, then all of a sudden kept getting hit with more charge offs than interest. Have lost money for five straight months. I have over notes and around 10K invested. Email Prosper multiple times asking them what is going on and they will not answer.

Can you e-mail support and ask if something is up? Invest in DC says. May 27, at 6: I am having the same experience. Anyone else seeing similar results?

August 17, at 5: As notes are delinquent and charged off, that is when an adjustment to the rate you are getting will get an adjustment. May 11, at 8: How can one living in Pennsylvania invest in P2P.

I am now into my 3rd year of investing in p2p via lendingclub and prosper. I suggest to use both and both platforms have their pros and cons but still more or less the same. Each do use different verbiage to list loans and what they rated as. But you do get used too it. This year I have setup my accounts to be fully automated because I grew tired of individually selecting notes my self. So far so good.

Keep in mind this is not a very liquid investment, it is unlike the stock market were you can instantly sell a position and have the cash cleared to your account within 3 days or faster. Sam, what do you suggest as a minimum or maximum that p2p or any crowdfunding should be apart of ones allocation?

January 27, at 7: Sam — Nice job on the blog. I am interested in this peer-to-peer alternative investment strategy. I live in Ohio and can not be participate given the prohibitive laws in the state.

Are you aware of another way to invest on these platforms? Could I potentially set up an LLC based in Virginia for example to get around these laws? January 27, at 9: You should try real estate crowdfunding with RealtyShares instead. My plan is to invest more surgically in the heartland of America now that Trump is president for and beyond. Coastal city real estate prices are cooling. May 5, at 1: I logged in to Prosper today and saw this note.

Seems to have dropped at least 2 points, christ. May 6, at 5: Damn, just logged onto my Prosper account. Feels like we totally got screwed! Thanks for highlighting this. Prosper Just Screwed Over Investors. Each of these companies are democratizing other asset classes venture, real […]. Be a Lanister and […]. Your email address will not be published.

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Financial Samurai Slicing Through Money's Mysteries. About Free Wealth Management Top Financial Products How To Start A Blog Negotiate Your Freedom. Should I Invest In P2P Lending? First, you need to be 18 years or older with a valid social security number. Institutional investors can also open accounts with a valid tax ID.

Second, you need to have a checking or savings account. Third, you have to reside in an eligible state. And fourth, you may have to meet certain financial suitability requirements based on your state, indicated by asterisks in the table.

MY GOALS INVESTING IN PEER TO PEER LENDING I plan on doubling my account size with my next deposit this month and consistently contributing to my account every month for the next year.

Wealth Building Recommendation Manage Your Finances In One Place: Is your retirement on track? Subscribe To Private Newsletter Enter your email address Comments nope says December 11, at 5: This year has been more or less a test for me to see: Matt, We have equal treatment available to us that institutional investors have.

I think they are way too risky. Any other downsides that folks have experienced? I have been trying to think of tax shelters that could help me not pay so much back in taxes. The estimated effective is 7. Here is the fine print: I received shares at the IPO price as well. Now the question is do I flip them or hold them? Money raining from the skies here in SF!

Whoops, missed this post when you first published it last week. Hi Eric, You should try real estate crowdfunding with RealtyShares instead. I think you can easily sign up and explore in Ohio.

Did anyone else see this? Trackbacks The Startup Journey: Alternative Investing With Sliced Investing Founders Financial Samurai says: February 19, at 9: Are You Correctly Predicting The Future To Maximize Your Online Revenue?

April 16, at 4: Alleviating Poverty Using Microfinance Financial Samurai says: April 17, at 8: Does A Good Credit Score Really Matter Anymore? April 25, at What Happens When A P2P Borrower Stops Paying? July 28, at Prosper performance review […]. Leave a Reply Cancel reply Your email address will not be published.

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