Taking a Look at Actual Prosper Returns Over 6 Years

I funded my first prosper loan on February 27, 2007.  I thought it was amazing that I would be able to act as a bank lending money to a person for a rate higher than I could get from a CD, bond or dividend.  I still think it is an amazing alternative investment, but that doesn’t matter since my employer doesn’t allow me to participate in prosper loans or any person to person lending.  Well, my last note finally is done and paid out so I can shut the account, however, before I do just that I figured I would share my account details and returns.

My Prosper Lending History

I funded a total of 44 notes.  About one-third of the notes were funded before prosper went into a quiet period to obtain S.E.C. approval to allow investors to sell and buy already funded notes.  This period was before my personal finance blog so nothing is documented, but I don’t remember having a specific strategy.  My returns for that period evidence my lack of strategy and discipline.  When prosper came out of the dark period I was excited to get back into person to person lending with a whole new intentional plan.

Share / Loan amount @ Rate Date / Day Prosper Rating Credit grade clip_image002[20]

Purchase date
Price @ Yield Net rec’d Status
$25.00 / $2,500 @ 9.15% 3 years Apr-27-2010 A - Apr-26-2010 $25.00 @ 8.15% $27.62 Paid
$25.00 / $4,000 @ 9.20% 3 years Apr-27-2010 A - Apr-25-2010 $25.00 @ 8.20% $28.05 Paid
$25.00 / $3,500 @ 9.00% 3 years Apr-08-2010 A - Apr-07-2010 $25.00 @ 8.00% $27.42 Paid
$25.00 / $9,000 @ 10.20% 3 years Mar-25-2010 A - Mar-24-2010 $25.00 @ 9.20% $28.26 Paid
$25.00 / $10,000 @ 10.20% 3 years Mar-24-2010 A - Mar-23-2010 $25.00 @ 9.20% $28.73 Paid
$25.00 / $2,500 @ 13.00% 3 years Feb-26-2010 C - Feb-25-2010 $25.00 @ 12.00% $29.90 Paid
$25.00 / $3,000 @ 9.10% 3 years Feb-23-2010 A - Feb-21-2010 $25.00 @ 8.10% $28.25 Paid
$25.00 / $1,400 @ 5.96% 3 years Jan-29-2010 AA - Jan-28-2010 $25.00 @ 4.96% $26.56 Paid
$25.00 / $4,000 @ 6.10% 3 years Jan-27-2010 AA - Jan-26-2010 $25.00 @ 5.10% $27.02 Paid
$25.00 / $6,500 @ 7.45% 3 years Dec-31-2009 AA - Dec-30-2009 $25.00 @ 6.45% $26.93 Paid
$25.00 / $20,000 @ 11.40% 3 years Dec-29-2009 AA - Dec-28-2009 $25.00 @ 10.40% $29.23 Paid
$25.00 / $2,200 @ 15.00% 3 years Dec-15-2009 C - Dec-14-2009 $25.00 @ 14.00% $29.57 Paid
$25.00 / $3,000 @ 10.00% 3 years Dec-02-2009 A - Nov-30-2009 $25.00 @ 9.00% $26.64 Paid
$25.00 / $7,500 @ 15.05% 3 years Nov-27-2009 B - Nov-25-2009 $25.00 @ 14.05% $16.17 Charge-off – Discharged in BK
$25.00 / $6,500 @ 10.40% 3 years Nov-04-2009 A - Nov-03-2009 $25.00 @ 9.40% $28.39 Paid
$25.00 / $7,900 @ 11.40% 3 years Oct-27-2009 A - Oct-26-2009 $25.00 @ 10.40% $28.63 Paid
$25.62 / $6,000 @ 7.20% 3 years Oct-09-2009 AA - Oct-08-2009 $25.62 @ 6.20% $27.44 Paid
$25.93 / $4,000 @ 10.00% 3 years Sep-24-2009 A - Sep-23-2009 $25.93 @ 9.00% $29.70 Paid
$25.84 / $3,500 @ 9.86% 3 years Sep-24-2009 A - Sep-22-2009 $25.84 @ 8.86% $29.11 Paid
$25.00 / $1,000 @ 18.87% 3 years Aug-28-2009 D - Aug-26-2009 $25.00 @ 17.87% $32.18 Paid
$25.00 / $2,500 @ 9.50% 3 years Aug-25-2009 A - Aug-24-2009 $25.00 @ 8.50% $25.54 Paid
$25.00 / $4,000 @ 7.15% 3 years Aug-18-2009 AA - Aug-17-2009 $25.00 @ 6.15% $25.09 Paid
$25.00 / $3,000 @ 16.00% 3 years Aug-07-2009 C - Aug-05-2009 $25.00 @ 15.00% $31.02 Paid
$25.00 / $3,500 @ 16.00% 3 years Jul-22-2009 C - Jul-21-2009 $25.00 @ 15.00% $29.16 Paid
$51.21 / $5,000 @ 12.80% 3 years Sep-25-2008 - C Sep-25-2008 $51.21 @ 11.80% $62.63 Charge-off – In collections
$75.19 / $5,500 @ 12.80% 3 years Aug-27-2008 - C Aug-27-2008 $75.19 @ 11.80% $56.43 Charge-off – In collections
$52.30 / $15,000 @ 17.00% 3 years Jul-17-2008 - B Jul-17-2008 $52.30 @ 16.00% $66.28 Paid
$54.44 / $4,999 @ 16.00% 3 years Jun-13-2008 - C Jun-13-2008 $54.44 @ 15.00% $67.77 Paid
$70.62 / $7,000 @ 12.00% 3 years May-16-2008 - AA May-16-2008 $70.62 @ 11.00% $82.51 Paid
$54.08 / $15,835 @ 10.99% 3 years Apr-30-2008 - A Apr-30-2008 $54.08 @ 9.99% $62.27 Paid
$49.16 / $1,000 @ 15.00% 3 years Apr-25-2008 - C Apr-25-2008 $49.16 @ 14.00% $51.81 Paid
$66.41 / $15,000 @ 16.84% 3 years Mar-24-2008 - B Mar-24-2008 $66.41 @ 15.84% $82.13 Paid
$50.89 / $3,000 @ 9.50% 3 years Feb-21-2008 - A Feb-21-2008 $50.89 @ 8.50% $57.86 Paid
$53.33 / $20,000 @ 9.99% 3 years Nov-05-2007 - AA Nov-05-2007 $53.33 @ 9.49% $57.78 Paid
$51.16 / $9,000 @ 9.00% 3 years Jul-20-2007 - AA Jul-20-2007 $51.16 @ 8.50% $53.85 Paid
$50.00 / $10,000 @ 8.70% 3 years Apr-06-2007 - AA Apr-06-2007 $50.00 @ 8.20% $56.60 Paid
$58.55 / $6,000 @ 8.75% 3 years Apr-06-2007 - AA Apr-06-2007 $58.55 @ 8.25% $66.33 Paid
$51.71 / $22,000 @ 13.40% 3 years Mar-26-2007 - A Mar-26-2007 $51.71 @ 12.40% $32.16 Charge-off – In collections
$50.00 / $8,000 @ 12.10% 3 years Mar-12-2007 - B Mar-12-2007 $50.00 @ 10.60% $50.26 Charge-off – In collections
$50.00 / $4,500 @ 14.34% 3 years Mar-06-2007 - D Mar-06-2007 $50.00 @ 12.84% $55.94 Paid
$50.00 / $4,950 @ 9.90% 3 years Mar-05-2007 - B Mar-05-2007 $50.00 @ 8.90% $50.17 Paid
$50.00 / $5,500 @ 15.00% 3 years Feb-27-2007 - C Feb-27-2007 $50.00 @ 14.00% $58.31 Paid
$50.00 / $5,000 @ 18.40% 3 years Feb-23-2007 - D Feb-23-2007 $50.00 @ 16.90% $43.88 Charge-off – In collections
$50.00 / $6,000 @ 14.10% 3 years Feb-23-2007 - C Feb-23-2007 $50.00 @ 13.10% $10.45 Charge-off – Discharged in BK

After I got intentional (marked in red) I only had one charge off.  My strategy was to take borrowers who were current, but were looking to consolidate at a lower rate.  My thought process was that I didn’t need to be a pig and chase crazy returns; just get a few extra percentage gain from those already paying their bills but looking to pay less interest.  Notwithstanding my strategy, I was told to stop investing in April of 2010 and the account just sat dormant for the past couple years.

My Prosper Return Summary

I am not sure why, but prosper provides different return calculations for different periods (seasoned vs non-seasoned) :

Prosper Annualized Returns

Prosper Annualized Returns by Year

It seems that the most important number is the total return of 4.32% which takes into account my entire history with Prosper.  I would absolutely invest again if I were allowed to.

 

What are your prosper returns?

13 Responses to Taking a Look at Actual Prosper Returns Over 6 Years

  1. Funny, I just logged into my account again last week. I still can’t participate anymore because my state is not supported. I really liked the old style of bidding down the loans so those that conceivably were the best risks paid the lowest amounts of interest. I was sad to see that option disappear. If they opened it up to my state again, I too would dive back in. The only crappy part was all the work you had to do at tax season treating each loan individually.

  2. I have been invested for little over 3 years with Lending Club and my return is 14.13% NAR and 13.21% XIRR. I am totally into P2P. I have no defaulted or charged off notes, no late notes. Hopefully my strategy will continue working and it will stay that way.

  3. I made a few loans with Prosper and a few loans with Lending Club in 2008 -2009. All of them were for borrowers rated A or B, so the loan interest rate was around 8-9%. I didn’t have any chargebacks, but I didn’t add any money since then. One of my loans was paid off earlier. I did like the fact that I was getting my principal and interest at the same time, which is different compared to a traditional bond.

    I would not invest much in P2P lending, because it is not worth my time ;-) If I had a $100,000 portfolio to invest, I can easily fund 100 loans at $1000 a pop. However, I don’t know how feasible it is to achieve that in most loans. But every month, I would have to find more borrowers to reinvest my principal and interest received. In comparison, If i were to purchase 100 individual stocks, I would probably still keep them and it would take less time to manage it over time.

    • $1,000 a pop isn’t too much trouble these days. For example, just last month the average loan issued at Lending Club was approximately $15,500. Plenty of room for your $1,000 investments. Not too mention with an set strategy or method of investing, it can take just minutes a day/week. I’m sure you would spend significantly more time on your stock research/monitoring each week than you would your peer-to-peer investments.

  4. I think I’m with Dividend Growth Investor. My professionally managed investments earn between 8% and 12% on a regular basis; more when the economy is zipping along, lots less (as in “negative returns”) when the economy crashes in flames. Probably Prosper lenders didn’t do well during the late great recession, either. It sounds like a lot of work for an investment that returns about what you could make with other, less labor-intensive strategies.

    • FAM – I believe early Prosper returns were negative for a couple reasons. One, Prosper’s ability to rate borrowers was far inferior than today in the current state of peer-to-peer lending. Two, Prosper had very little in the means of collection abilities.

      If you look at peer-to-peer lending as a whole, even with Prosper’s struggles initially, from July 2007 to June 2009, the S&P was down roughly 40%. Lending Club during the same period? Gain of 2%. And this is before they were able to improve and tweak their own underwriting based on historical returns. While I think diversity in investments is huge, one shouldn’t rule out peer-to-peer lending as a viable piece of your portfolio.

  5. Couple things Evan:

    1) The seasoned return is supposed to reflect your investments after most of the default risk has passed. Statistically most defaults, in dollar percentages, occur during the first 10 months after issuance.

    2) I don’t know if you have ever used the Excel function XIRR to calculate your returns, but it would be a great opportunity to see what your actual returns are as Prosper (and Lending Club) don’t account for idle cash in the account.

    • W2R, although LC doesn’t take idling cash into account I think as you invest it ti will potentially catch up (as long as you do not want to keep your cash idling in there), so I think it is a bit lagging but at the end it will be pretty much same or similar to NAV, don’t you think?

      • Martin, it won’t actually catch up on it’s own accord, but will change in relation to your actual return depending on more variables than just the idle cash. Suppose you start buying and selling notes in the secondary market. This will completely nullify the NAR seen in Lending Club as it can’t account for the profit or losses from these transactions.

        To answer you question a bit more directly, without any other factors, your internal rate of return will always lag the NAR and will not match. If you stay fully invested, it will generally be 1-2% below the listed NAR provided by LC.

        • That is correct. I forgot about FolioFn which is not included in their NAV as it is a separate entity. I actually keep folio separated as well. I think I should then include it.

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