I am tracking my Prosper internal rate of return (IRR).  As a reminder my prosper IRR is defined as actual cash flows up to the current month.  The current month is positive account balance minus monies added minus loan values in default.

I currently have 0 loans in default and an account balance of $3,614.65.  That makes my Prosper cash flows as follows:

Month	Interest Paid	Monies Added	Cash flow
7/06	$0.00	($200.00)	($200.00)
8/06	$1.92	$0.00	$1.92
9/06	$2.33	($200.00)	($197.67)
10/06	$2.73	($1,231.17)	($1,228.44)
11/06	$13.65	($1,430.43)	($1,416.78)
12/06	$25.40	($300.00)	($274.60)
1/07	$3,614.65	($150.00)	$3,464.65

 

Using Excel I determine that my Prosper IRR is currently 1.67%.  This is up from 1.41% on my first tracking date of 1/14/07 when I added my interest from my December monthly statement.

So what does this tell me?  So far it tells me I would have done better in the short run to leave my money in a high yield savings account (5%).  However, Prosper is not a short term play.  It is at least a 3 year commitment.  As such, I expect this number to rise steadily over time (for at least one year and at most 3 years) and then plateau.  It is my prosper IRR value once a plateau is reached that I am interested in.  And it is this value that I will be comparing against a high yield savings account to determine the long term benefit of Prosper.

After considering the comments from TB and some offline discussion I have restated my Prosper Jan 07 IRR: 18.41% 

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