Peer-to-Peer Lending as a Short Term Investment
Prosper Notes can provide attractive income while adding a new asset class to your portfolio. Peer-to-peer lending at Prosper offers an opportunity to earn returns that may be higher than those available in other short term investments such as certificates of deposit or money market funds.
Sometimes success means keeping your
options open
When you're looking for a short term investment, you need to pay careful attention to both how long your money will be tied up as well as returns. Usually, a longer commitment makes for higher interest rates, so investors need to carefully weigh the tradeoff. The best short term investment for one situation might not be right for another. For example, many money market funds are highly versatile, providing liquidity flexibility for investors — but have comparatively low returns.
Investing short term has a new alternative with peer-to-peer lending.
Consumer loans as short term investments
Prosper matches lenders with borrowers seeking short term loans. The average loan on Prosper is a three-year fully amortizing loan. Borrowers make monthly payments of interest and principal, which are promptly processed and distributed amongst lenders. This means you don't have to wait three years to see a return. You get some of your principal back with each borrower payment. As your account balance grows, you can take out the money or re-invest in new loans.
Prosper Notes carry a fixed interest rate for their duration. Yields on standard short term investments such as money market funds and CDs have fallen, leaving investors wondering where their short term investment options might be. In this atmosphere, many investors are looking to Prosper as a new investment medium for their money.
Prosper Notes are not FDIC insured nor are they guaranteed. Borrowers may default on their loans, exposing lenders to the risk of credit losses. You can diversify and spread your risk by investing as little as $25 per listing.
How Does Prosper Work?
Prosper is America's leading online loans marketplace. Prosper lenders invest in consumer loans by bidding on borrower listings. Prosper borrowers can borrow money, and can get great rates as a result of the competitive auction. Peer-to-peer lending makes it possible.
Prosper lenders bid on listings and purchase Prosper Notes. Each Prosper Note corresponds to a listing which sets forth the relevant details about the loan, including loan amount, price, yield percentage, and borrower information. Any payment from a Prosper Note is dependent on payments Prosper receives on the corresponding loan.
The Notes that correspond to specific borrower listings are offered pursuant to the prospectus. Investors should read the complete description of the Notes and risks associated with making an investment in the Notes as well as other information about us and our platform in the prospectus.
Prosper Notes are risk bearing and speculative investments for suitable investors only. If a borrower fails to make payments on the corresponding borrower loan related to your Prosper Note, you will not receive payments on your Note. There is the potential that you will not receive any payments on a Prosper Note. You should review the Prospectus before bidding on loans. Not FDIC-insured. Notes may lose value. No Prosper or bank guarantee.
