Question Your Prosper Strategy
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Having a strategy is essential to keeping your goals on track so you can realize them. There are too many variables when it comes to lending because most of these variables are beyond your control. As you may know by now, lending does not come without risk. Type “sub-prime meltdown” in any search engine and you will come across thousands of references to the risk of lending.
You can only control your own life, not the person who is borrowing from you. That is what make Prosper loans so popular among borrowers. Prosper loans are unsecured loans. This means if the borrower defaults on a loan, you may or may not get your money back, if any at all.
What you can do is take control of what you can do with your investment. It is all about knowing what you want to do, what your goals are, and how you are going to achieve it. Only you have a firm grasp on where you are in life right now with your financial situation. It is this knowledge you have that will allow you to answer these questions. You do not have to have a specific answer right now. That will come later.
Are you comfortable with borrowing and lending?
The odds are pretty good that you have tried both sides of the game at one point in your life whether it be a nickel or a couple of millions here and there. Either way, your comfort level will be directly related to your risk tolerance level. If you find yourself becoming uncomfortable then you will need to revisit your risk tolerance level to determine where you want to be at.
What is your goal for lending in Prosper?
Here are a few simple questions here that may help you identify your goal for lending in Prosper.
- Is it to create a monthly income?
- Is it to create a lending portfolio?
- Is it to grow your assets?
It is easy enough to say “My goal is to get RICH off the borrowers.” If you wanted to get rich overnight, then lending is not for you. If you are willing to control your exposure to lending risk, then it can be to your advantage to use these debt instruments as a means of creating an income or growing your assets.