Question: What is the difference between my Prosper Marketplace remaining cash and a wide-angle lens for my DSLR camera?
Answer: In a week, they will be one in the same so there will be no difference.
I had $250 in cash in my Prosper account waiting to be loaned out to borrowers, but today I initiated a transfer of my cash back into my checking account. I decided that the only thing guaranteed to be around three years from now – and thus my best overall investment – is a new camera lens. I’ll need to add a little more cash to buy a good lens, but it will be much more useful and enjoyable than watching P2P loans.
Why am I pulling the plug on my Prosper Investment by removing my remaining cash?
- I want to wait to see how well my Prosper loans perform over a longer period of time before investing more. (see my lender stats)
- I still strongly believe that the stock market is a better investment over a long period especially due to the tax treatment of the investment classes.
- I believe that Prosper lenders are under valuing risks and bidding down interest rates too low because there seems to be an almost never ending new stream of new lenders.
- Speaking of that almost never-ending stream of lenders, the latest stats show that the loan volume is dropping the last few months. There was also a drop last summer so it may be seasonal that people have more to do in summer, but I want to be sure before tying up more money.
- I grew bored of searching for decent loans. (I still hate the idea of the automatic bidding portfolios due to the number of borrowing idiots out there who will practically announce that they are idiots in their loan descriptions.)
- I was frustrated with finding a perfect loan at the reasonable rate with less than a day left only to be outbid at the last second by people dropping the interest rate far below my desired rate of return considering the risk.
- The overall economy and housing markets still show signs of weakness and people are going to pay P2P loans last.
- I read some of the posts on creditboards.com which will scare the hell out of any sane lender.
- Executives are bailing ship, are certainly no longer lending, and one is even late on paying his loan.
- I noticed how few of the early Prosper loan investors are still actively lending.
- I read several posts in the lobby such as why I won’t bid anymore.
Do I consider my P2P lending experience a failure?
So far, not at all.
- I have learned a great deal about credit.
- I have learned that there are lots of borrowers and lenders with amazing fantasies about reality.
- I have confirmed my belief that you should wade into a new investment class. (See muleshoes and other Prosper cliff divers as a cautionary tale.)
- Additionally, so far my portfolio of loans is doing fine both at Prosper and Lending Club.
Maybe I’ll pick up lending with Prosper again in the future, but it won’t be for at least several months until I have the chance to let some more dust settle on my portfolio and the company.