The “making passive income” unicorn has arrived, and it’s name is Prosper Loans. This is a peer-to-peer lending platform that anyone can begin to use with less than $100 and it’s great because it allows people to invest in loans for other people while taking the big name banks out of the equation.
The lender gets a higher return on their investment, the borrower gets a better interest rate, and this is the only guarantee of passive income I’ve found to date.
But let me tell you a little more about how I discovered this platform.
Before I became an Internet Entrepreneur teaching people how to create and market their own online businesses, I was a business minded individual who loved investing. In fact, I even traded stock as young as 15 years old. I lost a quick $700.00 from my savings account when I discovered the password to my E*TRADE account. If you’re wondering, yes…my Dad was furious.
I discovered Prosper Loans in 2008 and after reviewing all the information about peer-to-peer lending that I could, I decided that it would be a good idea to throw $1,000 into the Prosper platform to see how well it would do.
As of now my annualized return is 8.61% with my highest year yielding 13.05% and the account has $2793.72 (Screenshots below). Some of this is because I invested a little bit more money into the program, but the majority of it is because I keep reinvesting my own dividends and the account continues to grow.
I’m not a financial guru. I’m just a regular guy who enjoys investing and with this type of return you can probably understand why I’m such a fan of Prosper Loans and why I decided to write this blog post.
But enough about me, you’ve come here to learn if Prosper.com is legit and I’m here to tell you as a lender for the last 7 years, I feel it’s one of the best options out there for investors. But instead of taking my word for it, I’ll provide you with screenshots that show you my account performance to prove to you that my account is performing as well as I say it is.
Here’s what we will cover in this blog post:
Disclosure: Please realize that this post contains several links to Prosper that are affiliate links. This means that if you open an account (at no additional cost to you) I will earn a small commission. Understand that I am an affiliate of Prosper Loans because I’ve been a lender for over seven years and have over $2,500 of my own money invested in the platform.
Prosper Loans is based in San Francisco California and was the first peer-to-peer lending marketplace ever created. It was founded by Chris Larsen on February 5th, 2006. For those who don’t know, Chris was also the founder of E-loan.
From 2006 to 2009 the company operated under a variable rate model that allowed investors to bid on loans at rates which they determined. In other words, Prosper loans started as an auction style loan platform (like Ebay) that allowed lenders to bid on the best loans they could find.
In 2010, Prosper Loans filed a prospectus with the SEC that changed its business model to preset rates determined by Prosper based on a proprietary algorithm to determine a borrower’s credit risk.
Below are some key highlights about Prosper loans
Although all the information above about Prosper has probably helped you understand how trustworthy the company is, I want to tell you a few things that I’ve learned while being on the Prosper Loans platform for just over seven years.
When I started investing at Prosper I really wasn’t sure whether or not the platform was legitimate. In 2008, I had been reading about peer to peer lending and thought that if I ended up investing $1000 and the company took my money and ran, I learned a valuable lesson and I’d never make the same mistake again.
Now, looking at everything seven years later, I’m very happy that I invested when I did because my money has grown considerably. If I have any regret about what I did in the past, it’s that I didn’t invest more money from the start.
Let me show you a screenshot of how well my account has performed. Please realize that the screenshots that I share with you below are to prove the validity of the Prosper loans marketplace and are not my attempt of gloating about my return.
Average Annualized Returns and Account Value
As of now my account value stands at just under $2800 and most of that is the interest that I continue to reinvest into my account. Although I have made a few withdrawals over the years, I almost always reinvest my interest and this is what has grown my account so large. You’ll notice that from 2005 to 2008 (when Prosper was in its infancy) the platform didn’t give much of her turn at all but from 2009 on it has done an excellent job.
Annualized Returns by Purchase Period
Over time I’ve taken a more conservative approach to my investing on Prosper and I think that this is reflected in the annualized return numbers that you see with each of the years listed. I told a friend of mine about Prosper loans and he prefers to go after higher credit risk people, but that makes me a little too nervous because they may default and I’d much rather have a comfortable 8 to 10% return each year.
Additional Loan Information
This is a snapshot of all the loans that I’ve had over time. As you can see, I keep most of the money in my account invested at all times because I see it as a lost opportunity if I don’t have that money working for me. Beyond that, you’ll see that I’ve had 120 notes paid in full and 36 notes that were charged off.
If a note is charged off it means that the borrower didn’t pay their loan in good standing, but I can still get a percentage of the loan value if they settle after bankruptcy. I also want to point out that my loan charge offs are about 23% of the total loans that I’ve funded, but I think that a lot of this is because the first two years of the Prosper Marketplace weren’t the best and I’d be curious to see what my portfolio would look like if those two years weren’t included.
Just like in any other investment, you have to have a strategy that you follow in order to be successful.
Do I think that my annualized return on Prosper of 8.63% can’t be beat?
No, absolutely not.
As I mentioned, I’m just a regular guy who enjoys the idea of investing and I’m confident that there are other people out there who could do better than I do but here is what I’ve done to succeed as a Prosper lender.
In closing, I personally feel that Prosper loans is a very legit lending platform and highly recommend that any investor who would like to safely invest their money serious consider investing at Prosper. If you’d like to learn more, you can click here to view the Prosper lender welcome page.
What do you think of Prosper Loans? Have you invested there? Let everyone know in the comments below.