Author Topic: Why Prosper?  (Read 1403 times)

lendingprosper23

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Why Prosper?
« on: November 03, 2017, 06:05:32 PM »
For those investing new money or reinvesting old... why Prosper? For me its terrifying to think in the future I may need a large sum of money or bad news is trickling in about the company and all anyone can do is throw up their hands and say "oh well." The lack of secondary market turned me off immediately, so just want to hear thoughts as to why others continue to invest using this platform thinking 5-10-20+ years down the road.

Bpoole99

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Re: Why Prosper?
« Reply #1 on: November 03, 2017, 06:14:14 PM »
Not really sure why you need a secondary market, as I've built my portfolio to get a 3-4% monthly cash flow on an investment that's yielding 9-10% annually. Where else can you do that consistently? 

Fred93

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Re: Why Prosper?
« Reply #2 on: November 03, 2017, 07:47:59 PM »
For me its terrifying to think in the future I may need a large sum of money or bad news is trickling in about the company and all anyone can do is throw up their hands and say "oh well." The lack of secondary market turned me off immediately, so just want to hear thoughts as to why others continue to invest using this platform thinking 5-10-20+ years down the road.

Perhaps you should limit the amount of money you put into Prosper so that you have enough funds somewhere you can pull them immediately in emergencies.  Every imaginable investment opportunity is not the right place to put ALL your funds.  Some investments are more liquid than others.  Your concern makes fine sense, and the solution is to not put all your money into illiquid investments.

As for your "5-10-20+ years down the road" statement, Prosper loans pay back in 3 or 5 years, with equal monthly payments.  This means that your money is returned to you on average in 1.5 to 2.5 years if no one prepays, however folks do prepay, so your money is returned to you on average in 1 to 2 years.  (This average has the technical name "duration".) 

Even if it is the last cent you're worried about, you can limit that to 3 years by buying only 3 year loans.  So you need think nothing of "5-10-20+ years down the road".

If a lack of a secondary market turns you off, then that's just a fact.  Not a subject of other folks' opinion.  It is unfortunate that Prosper gave up on the secondary market, IMO, but they did.  Lending Club is still hanging in with the secondary market, for whatever that's worth. 

I don't use the secondary market much.  There isn't much volume.  You can't really move in and out there.  I have an automated buy strategy that is constantly running looking for high quality LC loans that meet certain price criteria.  After running this for over a year, it isn't clear that I've done well enough to pay back the effort.  Also the amount of money I've been able to invest this way is very small.