Prosper.com back up for bidding (sort of)!

I got an email from prosper.com and it looks like that they have gotten approval from the SEC to resume business. I am happy as I can start reinvesting my money into more notes and earn a potentially higher return.

I must reiterate that prosper investing is not for everyone. You need to be skilled in financial analysis and lending. It is great as a small hobby or alternative asset to stocks but should not be a major portion of your savings.

They have made many changes for the better including:

• $25 minimum bid versus the old $50 minimum
  
• You can see the borrower's credit score range and Prosper's rating
  
• You see the actual yield after Prosper takes their cut of the interest
  
• Many website enhancements over the old one (too many to list!)
  

Now that lending and borrowing has resumed I will start giving monthly updates on how I am doing. Here is a stat shot of how I am doing as of today:

Outstanding Loans: 40
Late: 1 (< 15 days)
Current: 39
Charged Off: 1
Paid Off: 3

Open Bids: 1 ($25)

Total currently invested: $1543.62 (Principal Value)

Prosper.com Lending: Good, but not for everyone!

I have been a lender on prosper.com for some time now. I got in before the SEC silent period and have had good results. I belong to a group on Prosper and we have our own message boards to discuss all things finance.

A lot of people lending on prosper have had mixed results. A lot of my fellow lenders in my group have had a lot of loans default on them. Fortunately for me I have had only 1 go bad and that one was picked by a "portfolio" system that I found out was a very bad idea.

I like the idea of prosper and people lending to each other without using a bank. It can be a great way to earn money on your money IF you know what you are doing. You need skills in financial analysis and credit analysis as well. I am fairly strong in these areas and feel I have made sound lending decisions.

The down side is that you get people who lie. No amount of numbers, filters, or re-reading can protect you from that. It comes down to a personal judgment call which will not always be right. You can get carried away by the high rates that people will accept and not see that one small detail that is a red flag. Some people are truly skilled at spinning information and cheating people.

When I was lending and bidding on loans I was quite selective and so far that has paid off. I am reaching the 1 year mark with some of my loans and to only have 1 default and 3 pay in full out of 43 is pretty good. I am also a borrower on prosper for a small loan to help build my credit and reinvest the money at a higher rate (not recommended for everyone!).

I am looking forward to the ability to trade my loans on a secondary market so I can dump some that are paying but do not fit my "mold" of a good borrower. I mainly wish to sell the ones that my portfolio plan picked for me and I do not like but luckily have not been late yet.

If you do decide to venture into social lending please do your homework first. Learning the hard way is NOT the way to learn about finance and investing. It hurts your bottom line and cause much undue stress in your life. I only suggest it using a little of your investment money and be conservative.