Prosper - 4 year experience wraps

My 4 year experience with Prosper.com ends this week. Conclusions first .... details second.


  • I made money. Not as much as I had hoped.
  • I learned a lot and I had fun! I had my own bank. I made mistakes but it was a worthwhile education
  • Would I recommend this to another investor? Answer: YES!
  • Why am I ending "the experiment"? Answer: I've moved on to equity investing. I think that an investment in 100 shares of AT&T is a better investment than an equal amount in Prosper.

Details with screen shots:

  • I deposited $ 4,238.34 and withdrew $4,458.23 for a gain of $ 219.89.
  • My guestimate is that my average loan period was 24 months (some went a full 36 months ... many paid off early). So my gain was 2.6%.
  • An explanation of the 83 notes sold: I invested in 83 loans at $ 25 each. When I decided to get out of Prosper.com I sold all 83. Some sales were net positive and some were at a minimal lost (a matter of cents). These 83 were basically a wash.
  • 79 loans were paid off (the report shows 78 but one of the ones that defaulted finally paid off in full
  • 11 loans defaulted. One of those later paid in full (see Deadbeat list - below)

Deadbeat list (partial ... click for larger)

Would I do it again and recommendations
  • I would like to do it again. I would like to invest $ 10,000 as Prosper experiment # 2.
  • I would only invest in AA and A loans.
  • With uber-diversification of $ 25 per loan. 400 loans of $ 25 teach
  • I think that such an investment strategy would provide returns of between 5 and 7%
  • For borrowers with average credit Prosper.com is a good way to borrow at a rate that bests the bank


  1. Hi Jim,

    Glad to see you tried Prosper and enjoyed the experience. If you do try it again, I think you will find you enjoy it more. Why?

    Because you invested in both our pre-quiet period (pre-Oct 2008) and our post-quiet period (post-July 2009.) In our post-quiet period, we dramatically changed our risk assessment model and default rates have dropped significantly. Since July 2009, Prosper Lenders have averaged returns of 10.7% annually. Here's a link to those before and after stats. http://www.prosper.com/welcome/marketplace.aspx

    We are very transparent with our data and it's easy to download through our API. Let me know if I can help you with any additional information about our industry. In addition, we are soon having an ROI Summit to discuss ROI in our industry and if you would like to attend via webinar, let me know.


    Glenn G. Millar
    Prosper Employee
    gmillar Prosper come
    Notes offered by prospectus. www.prosper.com/prospectus

  2. Hi, I see your point, but I have a different experience. I have been with Lending Club for almost three years and my rate of return is currently 13.12% and no default, late or charged off notes so far. Although I really like equity investing I am not dumping Lending Club over stocks. I like both and invest in both, because I am getting great results on both.


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