I took out a Prosper Loan almost 6 months ago in an effort to increase my family’s monthly cash flow. The strategy in taking out this loan is to borrow money at a low interest rate in order to purchase higher yielding investments so they can be added to my portfolio of passive income streams. These passive income streams will allow my family to reach our long-term goal of financial freedom.
Today I would like to provide the monthly status on my Prosper loan that I took out earlier this year. For a history of activity, please check out the following post – P2P Loan Status. When I last posted the status of my investments using this $1,000 Prosper loan, I had accumulated the following assets -
- Stock – I purchased 46 shares of HTE (Harvest Energy Trust).
- Cash Generated – As a result of selling Covered Call Options against my HTE (Harvest Energy Trust) position, I have generated $40.20 in positive cash flow. It is important to note that selling a Covered Call Option contract requires 100 shares. I have combined my $1,000 Prosper loan with additional funds to meet the 100 share requirement.
- Remaining Cash – I had $14.55 remaining in leftover cash after making the purchase of HTE (Harvest Energy Trust).
- Dividend Shares – I have received 1.167 shares of HTE (Harvest Energy Trust) stock through dividend DRIP payments (June & July). The total number of shares owned as of July was 47.167.
Current Status
This morning, I received the monthly dividend payment for August which was reinvested back into the stock using DRIP -
- August Dividend Payment – I received approximately .625 shares of HTE (Harvest Energy Trust) as a result of the August (2008) DRIP payment. This brings the total number of shares owned up to 47.792.
As of the close of the market yesterday (September 16, 2008), I estimate that value of the assets listed above at -
- Shares – 47.792 @ $17.34 per shares = ~$828.71
- Cash – $54.75
- GRAND TOTAL – ~$883.46
With the drop in price of oil and natural gas, I saw a very large decrease in the asset value of my loan. The value of these assets dropped by (16.7%) compared with last month. The total payments required over the course of the 3 year loan are $1,095.07, so I am now ($211.61) behind. Obviously I have some catching up to do, but still have over 2.5 years on the life of the loan. Since I have 30 months left on the loan, I would need to make up about ~$7 per month over the next few years. Assuming that HTE does not cut their dividend, I should be able to accomplish this by using DRIP.
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