The forever stamp. An investment opportunity?


So, while I was standing in line today to purchase exactly 47 two-cent stamps (due to the recent two-cent rate increase, which I was unaware of when I stocked up on stamps for the office two weeks ago), I considered the forever stamp.

You buy the forever stamp now, and can use it at any time in the future, regardless of future rate hikes. Presumably, the USPS will continue to produce forever stamps at whatever the current 1st class postage rate is at the time. So, when the postage rate increases to 65 cents, you will also be buying forever stamps at 65 cents each.

Jokingly, I declared to my friend, “I’m going to buy $5,000 worth of forever stamps, and sit on them for 20 years before reselling them on ebay and turning a huge profit! I’ll become a stamp tycoon!” (Well, as much as a tycoon as one can be on a $5,000 initial investment.)

Not really a great idea, though. First of all, there’s an issue of storage. My $5,000 of stamps would have to be kept in a secure area where they wouldn’t be damaged by water, etc. Second, nobody knows how much postage will actually continue to go up. However, the cost of postage is generally raised to keep pace with inflation. So, likely, my investment would be worth only what I paid for it, if you take inflation into account. A sound investment is supposed to beat inflation, not just keep up with it. And thirdly, is there really a resale market for 1st class stamps? I would only buy stamps from an ebayer if I was sure that they were legitimate, and even then, only at a reduced cost. If they weren’t cheaper, why wouldn’t I just buy my stamps at the post office?

Here’s some historical info on rate increases, found at productdose.com:

In 1975, the cost of a first-class stamp was 10¢, by the next year the rate increased to 13¢. The rate before Monday’s increase was 39¢. The 2¢ raise to 41¢ is a 5% increase. In 1975, the cost of a stamp was 10¢, by the next year the rate increased to 13¢. In the twenty previous years the rate elevated eight times to the current rate of 41¢, increasing at an average rate of 3.3% (2.6% in the last ten years and 2.1% in the past five years). If I purchased $1,000 of Forever Stamps today (2,440 stamps), I expect the value of those stamps in 30 years to be approximately $1,900, based on a 3.3% average stamp increase.

I think there are smarter places to put your money. Even placing your money in a savings account is a better option. The major drawback in stockpiling Forever Stamps is your money doesn’t compound, which is the better-than-gold standard of any smart investment strategy. $1,000 compounded at 5% over 25 years brings your investment to about $3,400.

[Read the entire article here.]

So… although it sounded attractive for a good minute or two, I think I’m going to pass on the stamp hoarding. I can do much better putting my $5,000 in an Emigrant savings account.


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