WealthBoy: Prosper to Provide Secondary Lending Market
Personal Finance
· 1 year ago
a loan depends on the expected future cash flows and a discount rate. The discount rate is the interest rate on the loan often with an additional risk premium
NewHorizon
· 1 year ago
"People that regret having tied up their money for 36 months will put their loans up for sale. "
WB, do you fall into either of those categories - those that regret and/or those that will put their loans up for sale?
WealthBoy
· 1 year ago
I was well aware that when I funded my account it would be a very long time before I would see my money again. In fact, I knew that if I invested poorly that I would never see it again, so I have no regrets. Until the quiet period, I had been reinvesting all of the principal and interest payments I had received. My total time horizon before I get my money back (if I make a positive return) is much longer than 36 months.
I intend to compound the payments for 36 months and then take a look at my overall performance over that period of time. After 36 months I will see where I stand and then decide whether or not Prosper will be a good place to keep investing. I will not be putting up any loans for sale on the secondary market before then. Ask me again 36 months from now whether I have any regrets, and I might give you a different answer. ;)
I will probably purchase loans for sale on the secondary market, especially if I am able to buy them at a discount. It may also be more convenient to purchase loans on the secondary market rather than the primary market. There will be no wait for loan approval, funding, and possible cancellation if the loan is not approved. The secondary market will probably become my market of choice when it comes to reinvesting principal and interest, because it will be possible to redeploy the funds much quicker.
NewHorizon
· 11 months ago
"After 36 months I will see where I stand and then decide whether or not Prosper will be a good place to keep investing."
Do you remember that in the prospers.org forum, you promised to update your readership about how well you're achieving your projected 11% ROI: "We'll see how the estimate stands by year-end when my portfolio has had the chance to complete one year of maturity." (Where "year" = 2008.)
According to my calender, it's time to get back to us.
WealthBoy
· 11 months ago
According to Prosper, my account value is currently sitting at $2,725.77, which would be a bit over 7% ROI (on $2,550). My average loan age is 290 days, so annualized it's about 8.5%. Of course, I'm not that naive to believe that my ROI is going to be 8.5% since I currently have six loans that are over 15 days past due.
The six loans that are late, represent $280.55 of the account value and I would say most of that is at risk. The worst case would be if all six default and nothing is recovered. If that were to transpire, I would be at -4.1%, or about -5.2% annualized.
flavored Coffee
· 1 year ago
People that regret having tied up their money for 36 months will put their loans up for sale. In desperation they may be willing to accept very low prices for the loans. This will present a great opportunity for investors to purchase higher yielding loans.
Investar
· 11 months ago
I agree, "t will certainly be interesting to see exactly what happens." I doubt the secondary P2P "market will function in a relatively normal manner." It will be what's known in the book as thinly traded and inefficient for several years. An inefficient market provides enhanced opportunity for 'enhanced rewards' but offers an equivalent 'enhancement' of risk. It will be interesting!
All Comments
The discount rate is the interest rate on the loan often with an additional
risk premium
WB, do you fall into either of those categories - those that regret and/or those that will put their loans up for sale?
before I would see my money again. In fact, I knew that if I invested
poorly that I would never see it again, so I have no regrets. Until the
quiet period, I had been reinvesting all of the principal and interest
payments I had received. My total time horizon before I get my money back
(if I make a positive return) is much longer than 36 months.
I intend to compound the payments for 36 months and then take a look at my
overall performance over that period of time. After 36 months I will see
where I stand and then decide whether or not Prosper will be a good place to
keep investing. I will not be putting up any loans for sale on the
secondary market before then. Ask me again 36 months from now whether I
have any regrets, and I might give you a different answer. ;)
I will probably purchase loans for sale on the secondary market, especially
if I am able to buy them at a discount. It may also be more convenient to
purchase loans on the secondary market rather than the primary market.
There will be no wait for loan approval, funding, and possible cancellation
if the loan is not approved. The secondary market will probably become my
market of choice when it comes to reinvesting principal and interest,
because it will be possible to redeploy the funds much quicker.
Do you remember that in the prospers.org forum, you promised to update your readership about how well you're achieving your projected 11% ROI: "We'll see how the estimate stands by year-end when my portfolio has had the chance to complete one year of maturity." (Where "year" = 2008.)
According to my calender, it's time to get back to us.
The six loans that are late, represent $280.55 of the account value and I would say most of that is at risk. The worst case would be if all six default and nothing is recovered. If that were to transpire, I would be at -4.1%, or about -5.2% annualized.