Today LazyMan addressed a comment by a reader that stated the Big winner was Prosper, the runner up was the borrower, and the loser was the lender…  While I fully support Lazy’s post and views I wanted to add more…

Please use the performance tool to check your strategy for yourself.  My numbers are from memory. 

The entire Prosper Market has an ROI of ~3%.
This includes a large pool of HR and NC (north of 40%) that are no longer allowed on Prosper.  Removing that pool and the ROI jumps to ~6-7%.  My personal strategy has been to focus on only the most qualified borrowers at above market rates (+1.5% at least)…  I figure the most qualified borrowers must reduce the default rate 2-4% at least and on top of that my 1.5% market premium…
I plan on making 10%+ in the long run.  My goal is 12%+.  My stretch goal is 14%+.
I feel like a winner.

My guess is the reader picked a lot of HR loans to start with enamored with the rates.  29% interest with a 30% default rate is no good.

Related Posts

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