Peer-to-peer lending has been around here in the United States for the better half of a decade. This type of lending environment strives to bring both individual and institutional investors together with various grades of qualifying borrowers. The two main companies in the peer-to-peer lending arena are Lending Club and Prosper with both having over five years of lending history. Since inception, these two loan facilitators have seen tremendous growth and change as they have developed and created an entire market for this type of lending.
My Prosper Investment
After considering an investment with Prosper for a couple of years, I finally pulled the trigger at the end of May 2013 and opened a taxable account with an initial investment of $1,000. Prior to making my investment however, I spent many hours playing with various borrower criteria and developed my own criteria for investing (2013) with Prosper. I have since modified my original criteria and will be using this one for 2014. Some of the highlights of my criteria is focusing on only 36 month loans with a rating of C or lower.
For some simple filters that will allow you to invest easily during times with few notes, check out my Simple Filters for Lending Club and Prosper post.
Below you will find the most recent summary of my Prosper account. If you’re interested the progress of my two Lending Club accounts, please check out the details on my Lending Club page.
In the table above you can see I am tracking my internal rate of return calculated by using Excel’s XIRR function and the return number provided by Prosper. There is a difference between these two numbers as a result of the cash drag experienced while waiting for notes matching my investment criteria becomes available. The return number provided by Prosper does not account for this idle cash.
Also included in the chart above is the period net interest, in this case the monthly amount, followed by the amount received over the previous 12 months, or trailing 12-months (TTM). While insignificant now, as this account ages, one will be able to see how trailing interest figure grows, demonstrating an ability for this account to compound and one day produce income to supplement my retirement without touching the principal. Net interest is calculated by taking the interest earned less any charge-offs, defaults, and service fees in the given period.
Detailed Prosper Results
For 2014, I am no longer providing detailed monthly updates for my Prosper account. Instead, I will be doing these updates on a quarterly basis. Below are my quarterly updates for 2014:
In addition to showing my monthly net interest in the table above, I’ve added the chart below to provide a visual demonstration of my progress.
I’ve also tracked my internal rate of return for my Prosper account, both on a monthly basis and running basis. These monthly amounts since the beginning of 2013 can be seen below:
I am excited to have added Prosper to my peer-to-peer lending portfolio, and plan on growing this account and eventually opening an IRA account sometime in the next year or two. If you have any questions about investing with Prosper, or peer-to-peer lending, please let me know via my contact page or the comments below.