Prosper - An interesting site showing stats etc.
21st November 2006
In an earlier post - Prospering from Prosper - I had pointed out a site called SavageNumber which had a number of tools you could use to help with your Prosper loan selection. A month or so ago I discovered another site which has an amazing array of stats about lenders and borrowers.
The site is called Eric’s Credit Community and is amazing in the amount of information it has there. For instance, if you go to my member profile page, you can see a fairly accurate view of my loan activities on Prosper including every loan I’ve participated in, my average interest rate, expected Return on Investment (ROI) based on the credit score of the various borrowers and a lot more.
The data is close but not completely accurate. For instance, my amount invested is inflated by about 25% due to the site counting my reinvested payments. Also, my average interest rate is around 18.43% while the site reports it as nearly a full point below that. Of interest to me however is my expected ROI based on the risk profile of borrowers I’ve lent money to. This is calculated to be 11.7% which is a pretty good return. So far I am beating it as I’ve had fewer than expected defaults. Over time however I should expect a return of around this amount.
Another piece of data I find simply fascinating is the List of Lenders by Amount Invested. There are nearly two dozen investors that have six figures loaned out through Prosper. The number one investor goes by the name of Pensioner. He (or she) has nearly three quarters of a million dollars invested in Prosper. I certainly hope that isn’t their entire nest egg but wow…simply wow. Even more amazing is their estimated ROI of nearly 19% (average raw interest rate over 26%). This is after factoring in expected levels of defaults. I could learn a thing or two from this person about picking loans. Unfortunately a large number of their loans are of unknown status so it is hard to tell how well they are really doing. They invest huge sums of money in single loans too (one bid is nearly $25,000) which seems overly risky but it does speak to the relatively small number of quality loans available for bidding.
I would probably never put the amount of money into Prosper that Pensioner has but I have to respect their courage. Plus if they really are getting a 19+% return on their money, that is nice cash flow (well into the six-figures per year). I wish them the best of luck and will be keeping an eye on their progress through Eric’s site.
November 29th, 2006 at 5:44 pm
thanks for link to eric’s site. very interesting.
November 29th, 2006 at 5:47 pm
And if I had 750k in prosper, it would probably be 10% of my liquid net worth.
I actually have lent money out on prosper and its about 1% of my liquid net worth[cash & stocks only].
i’ll see how it goes for a few months and i might put in another 4% to a total of 5% of my
liquid net work.
December 2nd, 2006 at 8:16 am
Very interesting site - I need to check it out!
Overall I’ve been disappointed with prosper - not enough high credit borrowers. M
December 11th, 2006 at 3:38 pm
I’ve considered investing some through prosper, but not until I kill off remaining debts. I will monitor your progress as an endorsement for or against the site. Thanks.
http://debtfighters.blogspot.com/
December 29th, 2006 at 9:48 am
[…] I was reading a blog (My Personal Finance Blog) about this very subject and I would like to comment on the ROI as defined by Eric’s Credit Community. […]
December 29th, 2006 at 9:51 am
Eric make 2 assumptions which make his ROI numbers inflated: not accounting for DTI by using the Experion expected default rates for less than 20% DTI and valuing both High Risk (HR) and No Credit (NC) loans as a 0% return.
I believe this causes the real ROI to be skewed in the higher direction for DTI and the lower direction for HR and NC. In the case of pensioner he has almost no HR/NC and 89% in C,D,E loans weighted D-. Clearly, pensioner has faith in the law of large numbers. I wish pensioner well and I too will be following closely.
This was an exert from a post I made on my blog (that references yours): http://rateladder.com/?p=30
April 30th, 2007 at 8:42 pm
Eric’s site is great info, I had some trouble with the csv file export, but can just cut and paste some tables into excel as well. In short, if following the loans of some of the top performers with my petty 50 bucks per loan, any reason to believe I wouldn’t hit the same returns? I’d take the double digit non market correlated returns any day. I’ve been in for a few weeks and have listed some strategies on my blog, as well as lessons learned. Best of luck lenders!
Dan
http://www.everydayfinance.blogspot.com