Not too long ago, I was Asking 2 Questions About Prosper.  I knew these questions would come into play later when I sat down to look at the numbers and do some thinking.  It always takes some time to absorb what you learn before you begin to apply it to your everyday activities.

In this case, I was thinking about the 1st question I should be asking about Prosper.

How long before I get my money back?

At first, when I thought about the question, my immediate reply was 36 months, or the standard length of a Prosper loan.

Today, I started seeing my answer in a different way.  The objective of my investments is to return my captial as soon as possible and keep investing the interest and dividends.  This way I preserve my captial as quickly as possible and continue to grow my investments with the income I earned from my original investment.

I currently have 9 active loans, all which are in good standing, at an average interest rate of 20.61%.  The Daily Interest Accrual (DIA) is presently .29 cents.  I was curious about the DIA because I knew it was important.  I am still learning exactly what this number means but it basically tells me how much interest I am accruing on a daily basis.  Now the question I have is how can I use the DIA to create a formula that will answer question #1.

365 Days / 12 Months equal 30.42 days per month

Why is 30.42 days per month important to know?  This average, 30.42 allows you to make a more accurate financial formula with.  We will now begin to create a formula to help us calculate how long before we get our investment back. 

(Remember, February is usually 28 days, and some months are either 30 or 31 days.)

Tthe DIA can go up or down depending on how many loans you have active.  Loans may be paid off or defaulted at any time without notice.  If you set DIA goal of $1.00 a month, then you can presume you will earn $30.42 a month. 

To put this formula into action, we will use be using my current scenario here. 

In my case, my current DIA  (.29 cents X 30.42 days) will equals $8.70 monthly interest income.  Now that I know my monthly interest income at the present DIA, if I wanted to get my principal investment back soon as possible on my first loan, it would take me 5.75 months before I can earn $50.00 or the equivalent of my first investment.