Managing idle cash in this low interest environment
April 25, 2008
By: 
Arohan
Category: Personal Finance
After evaluating different options, I have decided that p2p lending on Prosper.com offers excellent opportunity to earn returns better than a CD or a money market account. I may be late to the bandwagon as many personal finance bloggers have already signed up at Prosper, but I did take time to carefully review the activity on Prosper before committing my money to it
To me, it appears to offer multiple benefits
- Opportunity to earn better interest than traditional cash accounts. It is true however, that the principal is not as safe as it would be in a CD or a money market account, but a lender can choose to take on only the risk that he or she is comfortable with. Prosper provides much data about the borrower that you can use to gauge the risk, including credit rating, past payment history, verified income, etc
- It is also my bit to help good qualified borrowers access to capital where they may have been unable to access it from traditional sources like banks due to the fallout of the credit crisis
I seriously believe that p2p lending networks like Prosper have the potential to cause a serious change in the way credit markets work in US. It may take some more time, but the critical mass is building
If you would like to sign up as a lender on Prosper.com, I would appreciate if you use the following link to do it. This would put $25 in your account as initial capital for free and would also earn me a similar amount as a referral fee.
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- Leucadia National bottom fishing in the credit industry ruins
- Recession is here! What should an investor do?
May 21st, 2008 at 3:28 pm
Hi Mr Arohan,
I should have sent this through your contact form, but it didn’t work for me.
I heard about your site from your post at ValueWiki, and read your posts on your blog. I respect your philosophy and think I have something that you’d like.
I too am a value investor, but I realized that it’s very difficult to adhere to those principles without having the ability to determine the value of a company according to my own estimates of growth and risk, rather than relying on Wall St estimates and their unknown agenda’s.
So I built a website that provides the tools that Value investors need, based entirely on earnings data and your estimates of risk and growth the site will calculate the value of the equity based on two models, Free cash flow to firm and Free cash flow to equity.
Link: <a href=”http://www.equityhive.com/Main//Company/Valuation/MainForm.aspx?s=3164&r=1”<Equity Calculator
I also created a powerful publishing tool that can help you create extremely professional reports in no time at all.
Link: Publishing Tool
Just select the “Professional Valuation Report Template” and then click the green arrow button next to it and Preview your report. You’ll see a very professional report with tons of technical data that will support your opinion on the stock.
I think the site is tailored to a person like you, and I would be honored to hear your thoughts and opinions.
As I said, the site is built for people like you and if you think I should add certain features etc, there’s a good chance they’ll get built pretty quickly.
Thank you for taking the time to read my message, I hope to hear from you soon.
Regards,
Ruben Rotteveel.
May 27th, 2008 at 4:52 pm
This seems to be a good idea but do you mind letting us if you have received any return from the lending company yet?
jeflin’s last blog post..Resilient Stock Market Offers Relief
May 29th, 2008 at 2:32 am
Hi jeflin, it has only been about a month since I started testing the waters at Prosper. I have made 10 loans, all of them are current, with one of the loans (ironically with a C-credit rating) actually aggressively trying to pay down the principal (already made two payments whereas the first payment is not even due for another week). My average yield based on the loans I chose to fund is between 13-14%. Still remains to be seen how these loans perform over a longer time period. If some go bad, my effective yield will be lower. My borrowers range from AA to C ratings and I figure even if half the loans go bad, I will still end up with pretty good yield. And yes, as the payments are coming in, cash has started to slowly but surely accumulate.
Please share your experiences with Prosper if you sign up.
July 13th, 2008 at 6:47 pm
Too bad i didnt come across this blog before. Great stuff you got here. Thanks.