Back in September I wrote about a peer-to-peer lending website called “Prosper”. Several reviews I read about the site recommended it so I decided to enroll. As I noted, the enrollment was easy as was funding my account.
In the last five weeks I have transferred $450 into my Prosper account. I have invested my money into eleven different loans. The majority of them are “AA” or “A” rated by Prosper, but I also selected some lower rated loans as well. I want to see if the higher yield is worth it. Obviously risker loans have a higher chance of defaulting, so it is a matter of risk vs reward.
The first four of my loans have come due and I am happy to report that they have been paid. I have received $2.69 of which $1.30 is profits. I realize that this is not particularly impressive, but it is a start. I still have 7 more loans that have yet to come due and when and if they are paid, I will have about ten bucks in cash.
After 3 months I will have around $3o in cash. Since the minimum for investment in a loan is $25, I will be able to reinvest my pay out money into another loan and build my way toward my $5000 goal.
It will take a few years but once I achieve my goal, I should be able to expect a monthly return of around $42. I can put that money in a savings account and by the end of the year it could pay for all of my families Christmas presents. Or I could use it to offset the cost of a vacation or put it towards a college or retirement fund.
In the end it seems like peer-to peer lending via Prosper will allow me to build a passive income stream that I can use to reduce my bills and save for future endeavors.