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.
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