Saturday, August 15, 2009

Prosper for Dummies

So, after a couple of years, prosper is gone. I can't say that I am terribly surprised. They are still around and doing business but they are no longer lending any significant amount of money, according to Eric.

I'd like to say that I am surprised and that this was a great site that just went badly, but in many ways they reaped what they sowed. Personally, I invested several hundred dollars there and my money would have been safer and made just as much, if not more in a bank CD with a lot less stress and hassle.

Of course, it would not have provided me with the diversion of looking at loans and trying to size up who was a good credit risk, but that's not really what we should be interested in doing when it comes to our investments. Investing (at least for me) is not gambling.

Now many of my loans are almost done and I've made just short of 2.5% on my money but with tons of hassle. And if there is just one more default, I will be negative. This sucks. And it would be easy for you to point at this tirade and say it is sour grapes, and that would be partially true. But there are many people out there who are far more hurt than I was. These people have lost on the order of twenty percent of their principal according to Eric's Site.

In short, I won't do this again. These sites are probably all scams; I wouldn't trust Lending Club and these others either. They all want to make a big interest rate and pay no attention to the risk. And if the REAL risk were factored in, the interest rate would be so high that people would scream usury. The system is broken and what seemed like a good idea a couple of years ago is now just dying a slow, painful death.

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