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Investment guide

Taylor posted (49073) a link to yet another great online book. According to Paul K, author of the online book “Investment Guide“, the book was written to help an investor to

  • Implement the five essentials of investing,
  • Understand and manage risk,
  • Evaluate and select mutual funds,
  • Recognize and control the devastating effects of cost,
  • Develop and write an Investment Policy Statement,
  • Evaluate and choose an Investment Advisor, and
  • Locate a large collection of reference material.

TIPS are getting attractive

According to data posted HERE, the real yields of TIPS are getting attractive

Date 5 yr 7 yr 10 yr 20 yr*
03/28/06 2.22% 2.25% 2.30% 2.28%

Larry posted a note (49100) on the Diehards website about this today. The upcoming treasury auctions on April 10 (10-yr TIPS) and April 20 (5-yr TIPS) might be good opportunities to get some nice yielding TIPS.

Do you Prosper?

I loaned out $200 as a test of the Prosper system before deciding whether to commit more money. To date, however, I am quite disappointed with the system. From my experience, I found a long overhead waiting time before your money can be loaned out and before payment can be collected and deposited back into your bank.

The following is my experience:

1) Funding of the account. The money disappeared from my linked bank account on the morning of 2/15 but appeared in the Prosper system for use more than two full days later on the evening of 2/17. I lost 2 days of float of my money.

2) I funded two loans which were closed on 2/18 but for whatever reason, the origination date was delayed to 2/22. I lost another 4 days of float of my money here.

3) The borrower made a payment on 3/22 but the money was only available on 3/28. Six days are lost here.

4) You need to have $25 before you can transfer out any payment. If your loan payments are too small, sorry, they cannot be transferred out.

2006-03-28-prosper.png

Bummer. I can’t transfer out the loan payment because the amount is too small.

5) When you have finally accumulated $25 of payment, it again will take a few days for the money to make it to your bank after you submit a request at Prosper. I estimate I will lose another 3 days of float.

I am sure glad that I tried out the system with only $200. On hindsight, I should never have signed up with Prosper at all. Until Prosper can positively address the above concerns, I will pull out the money at the first opportunity. (But alas, the loans are all for three years unless the borrower decides to pay up early).

Conclusion? With the long delays associated with funding and loan payment, Prosper seems to be skewed against the lender.

EDIT 04/05/06: See also Vanguard Diehards’ discussion HERE.