Forever stamp, investment?

I just read about the new Forever Stamp that has been approved by the Postal Service. Basically, you can buy as many 41 cent stamps as you want, and they'll be good forever.

Any thoughts on stocking up? Guaranteed to go up in value, no taxes on the increases...

Well, let's look at historic stamp prices.

Here's a great little chart: link
Seems like the rate of increase has been fairly steady since stamps hit 8 cents back in 1971.
That makes an average rate of 33 cents / 36 years, or about 1 cent/year. Assuming historical trends continue, this means the annual rate of return over the next few years would be about 2.5%, and would decrease as time went on.

Not worth it!

psychtobe said:

I agree with your conclusion but not your method.

41 cents = 8 cents (1 + annual average rate of increase)^36

annual rate of increase = 4.6%

still not worth it! (unless you count this as part of your fixed income portfolio - like an I bond or a TIP).

You're fitting a linear function with an exponential!
The stamp price has been going up as a constant function of time, so fitting it to a constant rate of return doesn't make sense. Forever Stamps would have been a great investment back in 1971, when the annual rate of increase was 1 cent/year = ~12.5%. These days, though, that 1 cent/year is just 2.5%.

Nitpicking, of course, but it's the principle that counts.

This is a good investment if you buy up all the forever stamps before the next rate increase (say the day they announce a rate hike to 43 cents)

Of course the post office will be the big winner...every which way. No thank you.

interesting observation...Since the forever stamps don't have any prices printed on them, the day they announce the next price hike (we assume from 41 cents to 43 cents) they could just start to sell them at the higher price (43 cents). But something tells me that the USPS isn't that efficient (with their computer systems and vending machines and such) and that you could probably still buy forever stamps at the 41 cent rate even after they announce the next hike to 43 cents (and before the new rate is in effect)

Fortunately, the post office can't announce a sudden rate hike.

Rate hikes have to go through the Postal Rate Commission, periods for written comment, and public hearings. You'll know months ahead of time if there are any rate increases being planned, if you pay attention to the news.

tooshy said: Of course the post office will be the big winner...every which way. No thank you.

I dunno, stamps and mailing things seems like a pretty good deal. For 41c someone will come to my house and pick up an envelope. Then they will deliver that envelope anywhere in the US. I wouldn't deliver something down the street for 41c.

Didn't Ponzi make his money by claiming he was investing in stamps or something?

Anyways, The Simple Dollar had a post about investing in the forever stamp and the best time to buy them. In summary, stamps match inflation but aren't much of an investment. The best time to buy stamps is right before a price increase.

A summary with some additional data (oh, Priority Mail, why do you hate me so?):

The rates taking effect May 14 include:
- Letters, bill payments, greeting cards: 41 cents for the first ounce, up from 39 cents.
- Wedding invitation (2-ounces), 58 cents, down from 63 cents.
- Postcard, 26 cents, up from 24 cents.
- Priority mail flat-rate envelope, $4.60, up from $4.05.
- Express Mail flat-rate envelope, $16.95, up from $14.40.
- Parcel Post, 1-pound package, $4.50, up from 3.95.
- Bank statement, 2 ounces, presorted, 45.9 cents, down from 54.4 cents.
- Utility bill, barcoded, 31.2 cents, up from 29.3 cents.

I did a proper financial calculation and indeed it's not worth it. As others have mentioned, buying those stamps days before the hike is an OK short-term gain but you're better off doing other things with your money.

(If you're really doing a lot of eBay shipping you're probably better off buying a mail scale, I would think).

In the reviews that I read, there is the possibility that "Forever" is not going to last very long. Perhaps 5-6 years at the most.

I expect that USPS will pull the rug out from under people who are buying large amounts of these stamps, expecting to use them for many years in the future. Buyer beware.

01LX said: xpguy said: This is a good investment if you buy up all the forever stamps before the next rate increase (say the day they announce a rate hike to 43 cents)
...then sell them for 42 cents or 2 for 83 cents.Functionally, where would you do this? Selling online is pretty much out of the question, since shipping (oddly enough) would wipe out any gains. Standing on a street corner selling stamps for a cent profit each doesn't sound too rewarding, either.

stallion1031 said: tooshy said: Of course the post office will be the big winner...every which way. No thank you.

I dunno, stamps and mailing things seems like a pretty good deal. For 41c someone will come to my house and pick up an envelope. Then they will deliver that envelope anywhere in the US. I wouldn't deliver something down the street for 41c.Neither would I.

I see my remark has made a few POSTAL...lol

I love our postal service and getting free samples in the mail as well, but looking at it from what's good for my pocketbook, buying stamps ahead of need is so lame, and even with the inducement of a forever price it still does not make the purchase an investment. I'm already losing 5% on prebought stamps. I need an average of 2+ stamps per month. How clever, they won't need to bother with penny, two penny or three penny stamps like before. +1 for the USPS I thought FWers like to float on others not have others float on them.

Furthermore, based on the business model that is USPS, I'd say 41c is the correct price. Don't believe for a second that you are getting an astounding bargain. Why don't you carry that logic and say what a bargain airfare is...after all I couldn't construct a plane and fly myself 3000 miles across the sea for under $300!!

WalStMonky said: tooshy said: I thought FWers like to float on others not have others float on them.

For the amount that I spend in stamps they can have the float, I'll take the convenience. Sheesh, it seems like only last year that I was stuck getting 2 cent stamps to make my 37 centers work. Wait, it was just last year. I'll likely never even own a 39 cent stamp, just end up using 3 stamps to mail letters until sometime in 2008. Anyway, it's about time they did this.True, I'll take the convenience too and I think it is awfully smart of the USPS to finally do something about the annoying penny, two penny, three penny stamps depending on the amount of the lastest increase. But to buy MORE stamps as an investment is what this thread is about...to that I still say no thank you. I'm still irrationally miffed about giving my money to USPS ahead of the 2+ stamps I need each month when I buy a book of stamps. But that's just me...

tooshy, they do sell singles. I bought 5 39s + 2 2 centers for $1.99 on a Chase card last month.

frootmall said: But if the cost of a forever stamp is the same as the cost of a regular stamp, it makes sense to buy forever stamps instead of regular stamps. You are no worse off buying them and in case you have any left over when the rate goes up, you save the cost of extra postage. It also makes sense to buy what you'll need for a few months just before the rate goes up, since you'll recoup your investment in a short time.

But given historical rates of postage increase, you would not have made out very well stocking up for the long term.

Good point.

There are a couple of surprises in the new rates that have not gotten a lot of publicity. There will be three different First Class rates: letters (41 cents for the first ounce), flats (80 cents for the first ounce) and parcels ($1.13 for the first ounce). And while the rate for additional ounces falls from 24 cents to 17 cents, there is a big surprise when a letter exceeds 3.5 ounces: it must be classified as a flat (if under 3/4 inch thick) or a parcel (if over 3/4 inch thick). (See Section 221.)

Slugabed said: 10 - 20 years from now, will people still be using stamps?

Who uses stamps today...seriously???

Swailcat said: Slugabed said: 10 - 20 years from now, will people still be using stamps?

Who uses stamps today...seriously???

I do. I make handmade cards, hand write a personal note, and send them in the mail. I know many will disagree, but for some situations an e-card/e-ChristmasNewsletter/e-vite is just not the same. Sometimes a nice piece of personal mail just brightens your whole day.

I will probably buy (and use) the forever stamp.

czarandy said: So with the new law it makes no sense at all to buy the stamps, apart from convenience.Pretty much so...at least ibonds (as miserable an investment these are) pays the inflation rate regardless how many stamps I actually use.

I would like to know why they printed 5 billion stamps???

Did management honestly anticipate the bake sale of the century??? tsk tsk