Where I Beat the Market by 51.94% (since March)

Before the markets got too fishy I decided to commit a sum of money to a market I had long been paying attention to--P2P lending. 

I researched the prominent sites--Prosper, LendingClub, and Zopa.  Back in March  there were fewer sites than now. 

I decided that I would commit equal sums to both Prosper and LendingClub to try the experience and see what I liked, disliked, and where I got the better return. 

Here is how I have done since March. Prosper: 22.68% APY with 0 defaults. LendingClub 12.78% APY with 4 loans late on their payments. If all 4 loans default, my eventual APY will be something to the tune of -8%. 

LendingClub has two things going for it: 

1. Currently they are the only SEC approved P2P site 
2. The minimum loan denomination is only $25 making it easier to diversify your portfolio with a smaller sum of money (the min amount is $50 with Prosper).  
   

However, these benefits don't outweigh what Prosper has going for it: 

1. Transparency with the community.  On Prosper, it is easy to sort by lenders that already have personal friends, or borrower groups, invested in that person. This means that a network of personal and close associates have incentives to keep the lender from defaulting on the loan. This helps keep ROI up and defaults low.
2. Prosper has an auction system rather than pre-determined rates-of-return like lendingclub.  This allows you to find "deals" or expected rates-of-return above the market rate due to inefficiencies with the market.  
   

I am now very interested in learning about YadYap, the first P2P payday loan site, and 40billion.com, a P2P site for startup financing.