Peer 2 Peer Lending? (1 Viewer)

[UncleTrvlingJim]

My only issue would be the risk.

If I can get 6% from a mutual fund, or 10%-12% from them, that's something to look at.

But, then I look at the fact that it's almost impossible for me to lose *ALL* of my investment with a mutual fund....unless I misunderstand how P2P lending works, there is an actual risk of losing your entire investment. I'm not sure that *I* would be willing to risk that for the possibility of an extra 4% return. But, that's my personal opinion, and I tend to be a bit more conservative.

Well, you're not lending all your money to a single person. You can make loan amounts to multiple people for a blended return (you can loan out at $25 increments)... so your risk is probably pretty close to that of a mutual fund. On Prosper's website they claimed that everyone who loans 100 units (minimum $2500) has had positive returns. Note that they state that loans made from Nov. 2005-June 2009, had a blended loss of 6%... so you can lose money, just like any other investment.

I think peer to peer lending makes a lot of sense as part of someone's portfolio, and like anything you should diversify.

 

[TheDeparted]

Ok...I wasn't sure if they were saying that the return on the investment was 15%, or if the interest rate was 15%, and that the company kept 7% as a fee, returning the investor 8%...which was then offset by the defaults.

I read it as the interest rate is 15%. If everyone pays back their loans, you get 15% apr on that money. If 7% of the X people you lend to with that credit rating default on the loan (as expected in the average), you will lose 7% of your starting capital and your effective returns are averaged down to 8%.

 

[theSpaniard]

I read it as the interest rate is 15%. If everyone pays back their loans, you get 15% apr on that money. If 7% of the X people you lend to with that credit rating default on the loan (as expected in the average), you will lose 7% of your starting capital and your effective returns are averaged down to 8%.

This.

 

[theSpaniard]

Well, you're not lending all your money to a single person. You can make loan amounts to multiple people for a blended return (you can loan out at $25 increments)... so your risk is probably pretty close to that of a mutual fund. On Prosper's website they claimed that everyone who loans 100 units (minimum $2500) has had positive returns. Note that they state that loans made from Nov. 2005-June 2009, had a blended loss of 6%... so you can lose money, just like any other investment.

I think peer to peer lending makes a lot of sense as part of someone's portfolio, and like anything you should diversify.

Yes, P2P is basically another asset class that just provides another way to diversify. I still have money in mutual funds, stock, etc. but I just thought this might be a good way for me to invest in something a little more aggressive since I am still fairly young.

 

[bozoka45]

I did it back in 2009, but pulled my money out due to concerns regarding the SEC and Prosper's general business practices. It was enough to make me sell all my loans and get out. PropserForum.com used to be a great resource, but it looks like it got shot down. I had other sites, but I don't have any of those links.

I just checked my account, and I still have $15 in there. Now to figure out how to get that out

 

[Snakehead]

Has anyone borrowed money from Posper.com before?