Wednesday, May 28, 2008

Update: Prosper Loans

About a month ago I decided to dabble with Prosper as a way to increase return on my savings. I was a little skeptical but I thought I would try it out with $300. I chose 5 different loans and divided my money between them (4 loans at $50 and 1 loan at $100). I decided to stay fairly conservative to reduce the chance that any of them would default - 3 of the loans had a "B" grade, 1 had an "A" grade, and another was "AA."

I'm happy to report that all of my loans made their first payment. I don't know why this shocks me, but I was pretty impressed. That doesn't mean I'm out of the woods yet. There are still 35 more payments to go! Currently, I'm earning an average of 11.25% so over the 3 years I should earn about $90 in interest (if they don't default). That's much better than the $30 I would earn if it was in a regular savings account.

The one thing that is annoying about Prosper is that once the money is paid back (you get a payment every month), it's nearly impossible to get back out until you have a balance of $25. You can't make a bid to reinvest the money unless you have $25 and you can't withdraw the money unless you have $25. Right now, I only have $11 so it's pretty much stuck in there not earning interest. I thought about transferring money into the account just so I could then withdraw the full amount, but even that takes time and while the money is in transit you are not earning any interest on it. I suppose the trick would be to have enough invested so that each month your payments total more than $25.

I also started my first investing adventures with my Sharebuilder account. I'm happy to report that the stock I chose, rose about 10% in the first month. Granted, this could change at any time but I think it was a pretty wise investment. I'm starting to think that investing is super fun, but then again I haven't suffered any losses yet. Let's hope this beginner's luck continues!

If you're interested in trying your luck, you can use the following promotions to jump start your investments!

$25 bonus for signing up with Sharebuilder

Earn $25-50 for signing up with Prosper

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5 comments:

arizona Term insurance said...

I heard about this program only recently and may try it too. I can see where it would cause a bit of stress but it probably is the law of large numbers.

Julie said...

I think this is a great program. I work for a bank that does socially and environmentally responsible lending, and is also FDIC insured for those looking for more security from their accounts. ShoreBank has a high-yield savings account with 3.5% interest, look here for more information: http://shorebankdirect.sbk.com/

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