Author Topic: P2PL / Prosper  (Read 3703 times)

smella

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P2PL / Prosper
« on: January 07, 2016, 07:21:42 AM »
First of all, I'm sure there are many threads on this already, but with the forum's search function still broken, here I am.

I currently have a lot invested in the market, both etfs and individual stocks, but still have about 10k liquid left to put somewhere.  With the market being what it is, I'm looking for some better options.   Anyone experienced with using Prosper or similar p2pl platforms?   I'm specifically interested in hearing about negative experiences, since what I've read online so far makes it sound too good to be true. 

My idea is to skip finding my existing IRA in 2016 and put that 5.5k in a prosper account, since I did read that the taxes rate on earnings is steep.

matchewed

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Re: P2PL / Prosper
« Reply #1 on: January 07, 2016, 08:01:56 AM »
First of all why would you pay more taxes to invest in a subpar investment? I don't know your tax rate but let's assume it's 15%. Then for every 1000 earned you would need to pay 150. That leaves you with 750 to invest. Already a 15% shave. With a traditional IRA you get to get that 15% back. With P2P lending you do not. Maxing tax advantaged accounts is a good thing.

Secondly most P2P lending has been taken over by people w/ software. You can't compete with that. So don't try.

Using google to search individual websites -

Type in google search site:forum.mrmoneymustache.com "your search term"

https://www.google.com/?gws_rd=ssl#safe=off&q=site:forum.mrmoneymustache.com+prosper
https://www.google.com/?gws_rd=ssl#safe=off&q=site:forum.mrmoneymustache.com+p2p


HeadedWest2029

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Re: P2PL / Prosper
« Reply #2 on: January 07, 2016, 08:16:26 AM »
I use Prosper and have had good results, but I would agree with the reply above and max out your tax advantaged accounts first.  Prosper will trigger taxes at your federal tax rate.  I've been using Prosper for about a year so not a huge sample size, but so far I have a 12.79% seasoned return (I invest in mostly risky loans, spread out over 126 notes).  So far I've had 2 charged off notes, 1 sold note after it went into collections, and 3 currently past 31 days due which are probably going to get charged off too.  I only invested 5k so I'm viewing this more as a fun experiment with some decent upside, but make no mistake P2P lending is risky...probably riskier than stocks in some ways.  Right now we are in a period of relatively low unemployment, but if we have a 2008 situation again it could get ugly.  If you do go down this road, I recommend some backtesting to create an optimal filter and setup automatic reinvestment while limiting your investment in any one note to $50 max.  You can do some backtesting here https://www.nsrplatform.com/#!/stats/prosper .  I think P2P lending can be an interesting way to diversify, but it shouldn't be a huge portion of your portfolio and only used after maxing 401k, IRA's, HSA (if applicable), etc first

Aphalite

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Re: P2PL / Prosper
« Reply #3 on: January 07, 2016, 08:24:57 AM »
With the market being what it is

Seems like the market is not a bad deal right now, having burned off some of its excess valuation, why avoid it when it's going down and get in while its going up?

HeadedWest2029

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Re: P2PL / Prosper
« Reply #4 on: January 07, 2016, 08:25:39 AM »
FYI, this is my criteria on Prosper based on backtesting.  Warning: super risky, partially mitigated by diversification across 126 loans, but not for the faint of heart.  Adjust according to your risk tolerance </end disclaimer>

Scandium

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Re: P2PL / Prosper
« Reply #5 on: January 07, 2016, 08:42:57 AM »
FYI, this is my criteria on Prosper based on backtesting.  Warning: super risky, partially mitigated by diversification across 126 loans, but not for the faint of heart.  Adjust according to your risk tolerance </end disclaimer>

wow. So you're mainly lending to finance people's vehicles, engagement rings and vacations. No doesn't sound risky at all :P Just insane to me that anyone would take a high-interest loan to pay for something so non-essential

Curious why you'd leave out loans for boob-jobs, that one sounds like a winner..? *sarcasm. Although that might lead to increased income if they're a stripper or something..
« Last Edit: January 07, 2016, 08:45:26 AM by Scandium »

GGNoob

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Re: P2PL / Prosper
« Reply #6 on: January 07, 2016, 08:45:39 AM »
FYI, you can open IRAs at Lending Club and Prosper.

I don't have any bad experiences to share, as mine have only been good with P2P lending. I opened my first Lending Club account back in 2013 and recently opened a Prosper account. I use LendingRobot.com to auto invest for me.

HeadedWest2029

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Re: P2PL / Prosper
« Reply #7 on: January 07, 2016, 08:53:23 AM »
FYI, this is my criteria on Prosper based on backtesting.  Warning: super risky, partially mitigated by diversification across 126 loans, but not for the faint of heart.  Adjust according to your risk tolerance </end disclaimer>

wow. So you're mainly lending to finance people's vehicles, engagement rings and vacations. No doesn't sound risky at all :P Just insane to me that anyone would take a high-interest loan to pay for something so non-essential

Curious why you'd leave out loans for boob-jobs, that one sounds like a winner..? *sarcasm. Although that might lead to increased income if they're a stripper or something..

haha...I just invest based on backtesting data.  No judgement :)

Mr. FI

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Re: P2PL / Prosper
« Reply #8 on: January 07, 2016, 09:20:24 AM »
I agree,

Max your tax advantaged accounts first. I use Prosper for an investment not tied to the markets. I mainly focus on debt-consolidation loans--which I can get behind. Helping people finance a $20,000 wedding at 17% interest is not my cup of tea--I will not help finance a future divorce ;)

I have a 12% return rate spread out over 150 loans. I've only deposited $2800 of my own money--I use the earnings to re-invest in more loans automatically (through the system Prosper provides).

You can compete, it's really quite simple. I just set the parameters of the loans I like to invest in, set the amount at $25, and whenever those become available, they are automatically invested in.
But this is only like 6% of my portfolio (which, admittedly, is quite small) but I enjoy it.

Good luck!

smella

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Re: P2PL / Prosper
« Reply #9 on: January 07, 2016, 09:34:55 AM »
to clarify:  If i used Prosper, I would only use an IRA account on prosper.   

my spouse and i are already maxing out tax advantaged accounts, and i recently bought more "on sale" stock this week.  not avoiding the market, just looking to do other things as well.


JZinCO

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Re: P2PL / Prosper
« Reply #10 on: January 07, 2016, 11:49:41 PM »
I like P2P just for diversification reasons. Oh, and even though I use LendingRobot, I still get to be a little active, letting me scratch that itch. Overall I am doing well; once you get alot of notes you have to be very good or lucky, or very stupid or unlucky to have very high or low returns.

I'd say, be wary of getting emotional. I have had great success buying hi-yield 'current' notes on the secondary market.
However, I have let emotions get the best of me. I decided to pursue the strategy of purchasing late notes at deep discounts and tried it out on just two notes. It turns out I freaked when they became more-late and put them up for sale. While they were on sale both went on a payment schedule and the back and forth between LC and the borrower seems to suggest the notes were going to get back on track. In fact, one note had already started a couple partial payments but was labeled still late. As I was just getting comfortable, they got sold before I could cancel the sale and I incurred a loss. There are some crazy strategies used on the secondary market that have worked well for some but can be gut wrenching when they don't work.
« Last Edit: January 07, 2016, 11:51:54 PM by JZinCO »

AM43

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Re: P2PL / Prosper
« Reply #11 on: January 08, 2016, 07:24:43 AM »
I have been investing with LC for over 6 years now, so I guess that makes me a veteran.
While it has its drawbacks like any other investment, over all I am happy with returns.
I have my filters set up, I dont invest more than $25-50 per note and dont invest in small businesses, vacations, weddings,
car financing, medical bills etc.
My returns have been consistently on average 9% over the past 3-4 years.