What are people’s experiences and opinions on investing with Prosper?
Peer-to-peer (P2P) lending through Prosper can be a tempting way to potentially earn a return on your investment.
However, like any investment, there are pros and cons to consider, and reviews paint a mixed picture. Here’s what I found after digging into Prosper’s reputation:
Prosper’s Potential Perks:
Higher Returns (Maybe): Prosper can offer potentially higher returns compared to traditional savings accounts or bonds. However, this comes with increased risk.
Diversification: Spreading your investments across multiple loans can help diversify your portfolio and potentially mitigate risk.
Direct Impact: You can feel good about potentially helping borrowers achieve their financial goals.
The Not-So-Sunny Side:
Risk of Default: There’s always the chance that borrowers won’t repay their loans, which can lead to a loss on your investment. Prosperity doesn’t guarantee your money.
Middling Returns: While potentially higher than traditional options, reviews suggest Prosper’s average returns are around 5.8%, which might not be as high as some investors were hoping for.
High Fees: Prosper charges origination fees to borrowers, which can eat into your potential returns.
What Do the Reviews Say?
Mixed Bag: Reviews on Prosper vary. Some users report positive experiences and a decent return on investment. Others have encountered issues with loan defaults and felt the returns weren’t worth the risk.
Beware the Hype: Some reviews mention unrealistic expectations set by Prosper’s marketing materials. Remember, it’s not a guaranteed get-rich-quick scheme.
Do Your Research: Many reviewers emphasize the importance of carefully selecting loans to invest in. Prosper offers tools to help you assess borrowers’ creditworthiness, but it requires effort on your part.
Alternatives to Consider:
Low-Risk Investments: If minimizing risk is your priority, consider options like high-yield savings accounts, CDs, or bonds. The returns might be lower, but your principal is typically safer.
Robo-advisors: These automated investment platforms can help you build a diversified portfolio based on your risk tolerance. They typically come with lower fees than Prosper.
Real Estate Investment Trusts (REITs): REITs allow you to invest in real estate without the hassle of managing properties directly. They offer the potential for diversification and dividend income.
The Final Word:
Prosperity can be a legitimate way to invest, but it’s not for everyone. Carefully weigh the potential risks and rewards, do your research before investing in any loans, and consider alternative investment options. Remember, it’s important to invest wisely and not put all your eggs in one basket.
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Reviews of Prosper’s investing platform are varied; some say it is profitable, but others point out fees and hazards associated with borrower default.
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When it comes to mistakes, Prosper is awful. Prosper takes the “late fees” but doesn’t give them back to the user (who is taking the risk). If they have to send the loan to a debt collector, Prosper will get a cut of the money that is raised.