Author Topic: Are you still contributing to your P2P account?  (Read 2110 times)

Snow

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Are you still contributing to your P2P account?
« on: August 18, 2018, 11:02:12 PM »
I just started reviewing my investment portfolio and am trying to decide what to do with my P2P investing account. My account is with Prosper that I opened five or six years ago and I'm debating if I should still put money in or just let it wind it's way down and be done with P2P.

Any thoughts? Are you still contributing to P2P these days?

sfpf

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Re: Are you still contributing to your P2P account?
« Reply #1 on: August 20, 2018, 05:04:49 PM »
I switched from Prosper to Lending Club a couple years ago and am much happier. Lately I've just been maintaining my P2P account, meaning once a loan pays off I reinvest the funds but stopped contributing new money into my account. P2P is a pretty small part of my overall portfolio. I like the diversification but have been putting new money into bonds and holding cash lately.

Dario33

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Re: Are you still contributing to your P2P account?
« Reply #2 on: September 11, 2018, 11:52:32 AM »
I opened an account with Prosper maybe 3 years back and am winding it down.  Trying to simplify things with Index Funds, Bonds and real estate.

P2P may still have a place in the portfolio for those with an appetite for it, I'm just not one of them.  8)

rtysmith

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Re: Are you still contributing to your P2P account?
« Reply #3 on: September 11, 2018, 12:11:56 PM »
I'm winding all mine down in P2P, returns just are not there for the risk of unsecured loans.

Sam

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Re: Are you still contributing to your P2P account?
« Reply #4 on: September 11, 2018, 12:46:21 PM »
Prosper and Lending Club aren't doing well anymore. Prosper missed its opportunity to go public back in 2015, and then private company valuations took a big hit. I think they were once worth around $1.5-$1.8B, but they are maybe now worth $500M.

Lending Club stock is down 50% in 2018, and is down 85% since it went public.

Competition is tougher for P2P lenders now, so rates are going down, despite interest rates going UP!

As a result, I've focused my attention to real estate crowdfunding instead. I want something with collateral value.

See: https://www.financialsamurai.com/real-estate-crowdfunding-learning-center/
Regards,

Sam

tdswim

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Re: Are you still contributing to your P2P account?
« Reply #5 on: September 15, 2018, 08:32:24 PM »
No, I’m not contributing currently. My net annualized return (with standard LendingClub adjustments) is sitting at 4.6% with a weighted average 15% interest rate and 20.3 month weighted average age on the loans.

LendingRobot was running a promotion a couple months ago (still might be) to manage a few thousand for free. If returns improve, I’ll let it ride. If not, I’ll run it off over time and withdraw it. I’ve only had LendingRobot managing the portfolio for a couple of months. It’s nice not having to manually select loans but it’s essentially an experiment.

Speaking of experiments, I’ve been putting a small amount into loans on Groundfloor instead. It’s a crowdfunding site for house flippers and accepts funds from non-accredited investors. I like the concept of having collateral on the loans, shorter payoff periods, and the fact you only have to push a few buttons to throw $10 towards each loan (no hard labor). They list a dozen or so houses a week usually. It’s a pretty niche loan market with a new company - I wouldn’t recommend anyone invest their rent or mortgage money on there (or LendingClub/Prosper for that matter). I like the concept of funding the hussle more than funding who knows what with uncollateralized P2P loans.


Sam

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Re: Are you still contributing to your P2P account?
« Reply #6 on: September 15, 2018, 08:35:31 PM »
No, I’m not contributing currently. My net annualized return (with standard LendingClub adjustments) is sitting at 4.6% with a weighted average 15% interest rate and 20.3 month weighted average age on the loans.

LendingRobot was running a promotion a couple months ago (still might be) to manage a few thousand for free. If returns improve, I’ll let it ride. If not, I’ll run it off over time and withdraw it. I’ve only had LendingRobot managing the portfolio for a couple of months. It’s nice not having to manually select loans but it’s essentially an experiment.

Speaking of experiments, I’ve been putting a small amount into loans on Groundfloor instead. It’s a crowdfunding site for house flippers and accepts funds from non-accredited investors. I like the concept of having collateral on the loans, shorter payoff periods, and the fact you only have to push a few buttons to throw $10 towards each loan (no hard labor). They list a dozen or so houses a week usually. It’s a pretty niche loan market with a new company - I wouldn’t recommend anyone invest their rent or mortgage money on there (or LendingClub/Prosper for that matter). I like the concept of funding the hussle more than funding who knows what with uncollateralized P2P loans.

Never heard of Groundfloor. There are literally hundreds of real estate crowdfunding sites. I would focus on the largest e.g. Fundrise, RealtyShares, maybe PeerStreet. I bet consolidation is on the way.
Regards,

Sam

rtysmith

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Re: Are you still contributing to your P2P account?
« Reply #7 on: October 08, 2018, 07:32:39 AM »
FYI from Prosper today:

As one of the largest online marketplaces for consumer credit, Prosper is focused on maintaining a balanced and sustainable marketplace that is equally appealing to both borrowers and investors.

On September 26, 2018, Prosper's Chief Credit Officer Ashish Gupta provided an update on our blog regarding the credit and pricing changes on Prosper's platform in 2018. We believe these changes will help drive an improvement in overall platform returns.1


Credit Changes

Over the last few months, we have implemented multiple credit tightening actions focused on a borrower's ability-to-pay. As of Q3 20182, the loan weighted average borrower's income on the platform is trending at $104,395 vs $86,546 a year ago (see Exhibit A on our blog post). The monthly scheduled payment to income (PTI) ratio, a key measure of a borrower's ability to make payments on their loan, is trending at 5.7% for the average borrower as of Q3 20182 vs. 6.6% a year ago (see Exhibit B on our blog post).

We believe the timing of these changes is critical given that we think we are in the latter part of the credit cycle and overall revolving debt in the US is higher than prior to the financial crisis in 2008.3

Pricing Changes

On the pricing front we have been increasing borrower rates on our platform since March of this year to stay in-line with changes in the interest rate environment (see Exhibit C on our blog post). On a mix-adjusted basis, we have increased overall platform interest rates by 133 basis points (bps) since the beginning of the year. On September 26, 2018, the Federal Reserve announced an increase in the Fed Funds rate. In light of this development, the rates offered to borrowers through the Prosper platform will be increased by an average of 14 bps, translating to an overall increase of 147 bps on a mix-adjusted basis since the beginning of the year.


nycrite

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Re: Are you still contributing to your P2P account?
« Reply #8 on: October 11, 2018, 01:57:22 PM »
I'm not contributing anymore, but that's because I live in a restrictive state. I used to contribute no problem, but something changed and is now disallowing contributions. I haven't researched why, but after reading some negative P2P reviews on this thread, I'll also wind my account down and simplify to treasuries or something more simple.

Eddie

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Re: Are you still contributing to your P2P account?
« Reply #9 on: October 21, 2018, 12:33:56 PM »
I started taking my money out of LendingClub and putting it into my taxable index fund account.

Your funds are locked in for a very long time and there's always a risk of the loan defaulting.

I decided to start withdrawing a year and a half ago and it's been a slooooow process. I'm not sure if it was worth the trouble, but here were the stats:

March 2016 - Invested $5k. Never invested any additional funds. Auto-reinvested any loans paid back.
May 2017 - Turned off automatic reinvest. Started withdrawing available cash to invest in index funds.
October 2018 - $4340 withdrawn. Still have $989.86 "adjusted account value" remaining.

If no remaining loans default, I'm looking at $329.86 profit from a $5000 investment over 2.5 years.

Pretty sure I would have been better off with index funds.

nycrite

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Re: Are you still contributing to your P2P account?
« Reply #10 on: October 22, 2018, 07:05:59 AM »
Your funds are locked in for a very long time and there's always a risk of the loan defaulting.

This part is a major downside of P2P lending. It's easy to put in lump sums into the platform. Withdrawing money is going to take me 2+ years. Aside from default risk, the liquidity risks are understated, in my opinion.

ManInAVan

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Re: Are you still contributing to your P2P account?
« Reply #11 on: November 25, 2018, 06:54:35 PM »
Quote
Your funds are locked in for a very long time and there's always a risk of the loan defaulting.

This part is a major downside of P2P lending. It's easy to put in lump sums into the platform. Withdrawing money is going to take me 2+ years. Aside from default risk, the liquidity risks are understated, in my opinion.

I've had some concerns with this aspect of my account on Lending Club, but I'm curious if anyone here has used the trading platform through Folio Investing to unload some notes quickly.  I know that it costs 1% of the selling price to do this, but I'm wondering just how plausible it is to unload these - as a 1% doesn't seem like too large of a "penalty" to get out of as much as 5+ years of hold time.

rluks

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Re: Are you still contributing to your P2P account?
« Reply #12 on: November 26, 2018, 12:25:12 AM »
I'm contributing to Mintos and two Czech P2P lending platforms: Bondster and Zonky. Returns are about 7% (Zonky only 4.5%). Liquidity is not great, but it's not like I need to withdraw anyway. I reinvest my profits both automatically with autoinvest and manually on Zonky.

Why are you abandoning P2P lending?

surpass

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Re: Are you still contributing to your P2P account?
« Reply #13 on: December 07, 2018, 08:53:17 AM »
I started to unwind my port there, but its a slow process.  My initial rate of return was around 8% and now they have revised it down to 4%.  There were just way too many defaults and I lost money on the platform.  Its probably going to to take another 1-2 years to get back everything.  I'd avoid unsecured loans in the future.  Not worth the risk from my experience. 

blackswan

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Re: Are you still contributing to your P2P account?
« Reply #14 on: December 12, 2018, 12:32:58 AM »
I've been investing in P2P over the past five years and have achieved double-digit returns every year. I love the asset class because:

1) a good strategy can yield out-sized returns relative to just about any other fixed income instrument
2) liquidity is quite strong given the return profile (monthly loan amortization is helpful and duration is actually quite low, especially if you've been building a portfolio over time)
3) consumer credit has typically fared well in recessions relative to other asset classes

Given where we're at in the economic cycle, I'd be shocked if a diversified, well-curated P2P portfolio didn't outperform the S&P over the next several years.

tylerdurden03

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Re: Are you still contributing to your P2P account?
« Reply #15 on: January 05, 2019, 01:47:23 PM »
I opened my Lending Club account 5 years ago and although my current IRR is about 5.5% (invested mostly in A and Bs) I am winding it down for two reasons:

1. Lending Club has pivoted to institutional  buyers and as a result retail like us arent getting good loans to choose from
2. Its late in the economic cycle and consumer defaults have nowhere to go but up.

I am winding down all of my P2P accounts (Prosper and Upstart as well).

Groundfloor - I would strongly avoid.  I opened an account about 18 months ago and although no losses I have ALOT of loans in delinquency and workout.  Most of their loans only pay at maturity and I have my doubts about the ability of this platform to survive.  If you must look at hard money Peerstreet is a better option in my view.

Fat Tony

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Re: Are you still contributing to your P2P account?
« Reply #16 on: January 10, 2019, 12:36:25 AM »
I actually pulled my money completely in 2017. I'm quite positive that a lot of the positive early returns were just the early honeymoon period - and as markets became more efficient the free lunch of the much-blogged about 6-8% returns disappeared. My final return before pulling out was in the 2-3% range, which was abysmal considering the shockingly high risk of LC, basically worse than the junkiest of junk bonds. If you look at the expected return range as well, it wasn't great either.

Divesting from Lending Club was an absolute pain. I had to continually log in, set prices, wait for them to be bought on the marketplace, and eventually keep on adjusting prices until I sold. I remember someone came up with a selling strategy that used the Sacramento, CA (94204) ZIP code as their selling strategy, and I could not for the life of me get ANYWHERE near as good sell points on the offers too. I was pretty patient, selling over several weeks, and had to offer noticeable discounts on many notes. https://www.lendingmemo.com/sacramento-method/. On top of that I also ended up with a bunch of extra tax forms. I may write up a blog post on the process to provide data points for more recent years, since most of the posts online are still from the "good days"

I consider it one of my most annoying investments ever, and it reminded me that while it was a fun experiment in another asset class, I should probably just drastically simplify my life, focus on being happy, and don't try to excessively complicate my assets/financialize everything.

Investing in tax-inefficient interest income outside of an IRA can also be a major mistake, since your returns are cut down so heavily and you may be averaging muni-like returns for equity/venture-debt level risk.

IMO, the golden age of P2P lending is over and I don't think it's a smart allocation anymore. Especially without VC bonfire money to feed the platforms (or them  mainly drying up), the companies will need to also charge fees and further create drags on returns.