Comments on: How to Beat the 10% Compounding Myth http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/ Saving, Earning, and Investing Money Sat, 11 Feb 2012 03:58:23 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Lazy Man http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/comment-page-1/#comment-593107 Lazy Man Thu, 21 Jul 2011 01:32:21 +0000 http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/#comment-593107 Yosef, I wrote this article many years ago. It turns out that Prosper returns weren't that good for anyone back then. However, they've improved. Lending Club is also very good. I'm not making more than 10%, but I'm getting close to 7%, which is better than stocks have been performing over the last ten years. I don't tend to view P2P lending in a cash flow sense anymore. I don't think it is wise to pour much of your money in that area as I used to. You should think of it like investing in bonds. Yosef,

I wrote this article many years ago. It turns out that Prosper returns weren’t that good for anyone back then. However, they’ve improved. Lending Club is also very good. I’m not making more than 10%, but I’m getting close to 7%, which is better than stocks have been performing over the last ten years.

I don’t tend to view P2P lending in a cash flow sense anymore. I don’t think it is wise to pour much of your money in that area as I used to. You should think of it like investing in bonds.

]]> By: Yosef Katz http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/comment-page-1/#comment-593104 Yosef Katz Thu, 21 Jul 2011 00:54:10 +0000 http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/#comment-593104 Hi, Another question to Lazy Man. I have been investing in social lending for 8+ months and seeing good progress (compared to other things out there). My question has to do with overall investing and how to look your earnings. One of my thoughts is if I want to have some item I pay for regularly covered so that my direct work effort is not expended to cover its cost then I must be making x to cover that item. So if I pay $86/month on my gas bill and I have an investment that gives me a consistent after tax/after inflation yield of, say, $100/month then my gas bill is paid for as long as things don't change... But if I am withdrawing my profit and only retaining $14/month then that is my compounding picture. What my rambling is trying to get at is how do you view your cash flow and profit from your account in a social lending program like Prosper (or LendingClub)? I have seen that there is x amount of cash flow and if I reinvest all of it then that grows at a certain rate. If I invest all and continue to deposit and invest it grows more... your thoughts please. Hi,

Another question to Lazy Man. I have been investing in social lending for 8+ months and seeing good progress (compared to other things out there). My question has to do with overall investing and how to look your earnings.

One of my thoughts is if I want to have some item I pay for regularly covered so that my direct work effort is not expended to cover its cost then I must be making x to cover that item. So if I pay $86/month on my gas bill and I have an investment that gives me a consistent after tax/after inflation yield of, say, $100/month then my gas bill is paid for as long as things don’t change…

But if I am withdrawing my profit and only retaining $14/month then that is my compounding picture.

What my rambling is trying to get at is how do you view your cash flow and profit from your account in a social lending program like Prosper (or LendingClub)? I have seen that there is x amount of cash flow and if I reinvest all of it then that grows at a certain rate. If I invest all and continue to deposit and invest it grows more…

your thoughts please.

]]> By: nicebank http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/comment-page-1/#comment-10589 nicebank Thu, 31 May 2007 16:47:44 +0000 http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/#comment-10589 Great stuff. I've been digesting a lot of your posts and wish I'd read them before I starting bidding! 2 questions - With half of your portfolio in the lower risk loans, what is your ERAROI for your entire portfolio? Also at 24% average for the riskier loans, what is the average credit rating - E, HR? Also, Digerati raised a great point --you need to factor in the time your money isn't earning interest. Anybody know a formula to factor that in assuming a average lag time? Great stuff. I’ve been digesting a lot of your posts and wish I’d read them before I starting bidding!

2 questions -

With half of your portfolio in the lower risk loans, what is your ERAROI for your entire portfolio? Also at 24% average for the riskier loans, what is the average credit rating – E, HR?

Also, Digerati raised a great point –you need to factor in the time your money isn’t earning interest. Anybody know a formula to factor that in assuming a average lag time?

]]> By: Lazy Man and Money » Prosper Changes: What They Mean to Me and You http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/comment-page-1/#comment-2514 Lazy Man and Money » Prosper Changes: What They Mean to Me and You Tue, 13 Feb 2007 13:58:24 +0000 http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/#comment-2514 [...] I’d like to thank Prosper for recognizing my post How to Beat the 10% Compounding Myth in their Prosper in the Blogs [...] [...] I’d like to thank Prosper for recognizing my post How to Beat the 10% Compounding Myth in their Prosper in the Blogs [...]

]]> By: Prosper loan stats http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/comment-page-1/#comment-2498 Prosper loan stats Mon, 12 Feb 2007 23:36:42 +0000 http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/#comment-2498 Prosper is a very interesting investment opportunity. New lenders should spend some time in the forums ad gather information, hints and strategy advice of experienced lenders to avoid costly mistakes. Prosper is a very interesting investment opportunity. New lenders should spend some time in the forums ad gather information, hints and strategy advice of experienced lenders to avoid costly mistakes.

]]> By: The Digerati Life http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/comment-page-1/#comment-1587 The Digerati Life Tue, 23 Jan 2007 04:40:25 +0000 http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/#comment-1587 Wow, this is very interesting indeed. I don't think I can take the risk of lending to others though. I'm way too risk averse when it comes to scaled down transactions. We've previously lost money on endeavors such as this in the past so I've balked from them.... Good luck with your loans! Wow, this is very interesting indeed. I don’t think I can take the risk of lending to others though. I’m way too risk averse when it comes to scaled down transactions. We’ve previously lost money on endeavors such as this in the past so I’ve balked from them…. Good luck with your loans!

]]> By: Lazy Man http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/comment-page-1/#comment-1521 Lazy Man Sat, 20 Jan 2007 06:59:08 +0000 http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/#comment-1521 It's true that money does sit on the sidelines not making interest. I tend to move $100 in a couple times a week and get that in loans as soon as possible. I put that money into two as quick as possible. True it's taken me nearly a month in EXTREME cases, but most of the time it's about two weeks. However, the money is invested for 3 years. This means that even in the worst case, the money is working for me 36/37th of the time. In the better cases it's earning me interest about 71/72nds of the time. The exception is when a loan gets paid back early. That's happened to me once (in 70 loans) and to be honest, I was happy to pocket the interest and move the money into the next loan. So while it may feel frustrating and seem like an eternity to get your money in a loan, I'm not sure it's mathematically a problem. Let me know if my math or reasoning is off. It’s true that money does sit on the sidelines not making interest. I tend to move $100 in a couple times a week and get that in loans as soon as possible. I put that money into two as quick as possible. True it’s taken me nearly a month in EXTREME cases, but most of the time it’s about two weeks. However, the money is invested for 3 years. This means that even in the worst case, the money is working for me 36/37th of the time. In the better cases it’s earning me interest about 71/72nds of the time. The exception is when a loan gets paid back early. That’s happened to me once (in 70 loans) and to be honest, I was happy to pocket the interest and move the money into the next loan.

So while it may feel frustrating and seem like an eternity to get your money in a loan, I’m not sure it’s mathematically a problem. Let me know if my math or reasoning is off.

]]> By: Digerati http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/comment-page-1/#comment-1515 Digerati Sat, 20 Jan 2007 03:22:56 +0000 http://www.lazymanandmoney.com/how-to-beat-the-10-compounding-myth/#comment-1515 You also need to factor in the time it takes prosper to get your money working for you. You may make 24% but if the money is only invested (it takes them a couple weeks to complete the loan process) half the time, you make only 12%. Unfortunetly, you have to give Prosper your money, then wait for the rest of the pool to complete the loan. That process takes time, and so even if you earn good returns on your individual investments, your money is tied up way too much to get a good returen. Stay with prosper for a while and see what the real returns end up being. You also need to factor in the time it takes prosper to get your money working for you. You may make 24% but if the money is only invested (it takes them a couple weeks to complete the loan process) half the time, you make only 12%. Unfortunetly, you have to give Prosper your money, then wait for the rest of the pool to complete the loan. That process takes time, and so even if you earn good returns on your individual investments, your money is tied up way too much to get a good returen. Stay with prosper for a while and see what the real returns end up being.

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