5 Reasons Why The Forever Stamp Is A Lousy Investment


forever stampThere has been some discussion and I have received a couple of emails pertaining to the question of how good of an investment the forever stamp will be when it arrives. My answer: Lousy. While on first appearances purchasing forever stamps and holding onto them may seem like a good investment, the reality is there are too many problems to ever make them an effective investment:

1. The first class stamp price is only going up $0.02 from $0.39 to $0.41. That is an increase 4.9% The forever stamp, however, will initially be sold for $0.41 which gives you no gain at all and which is much less than you can currently get at an online bank.

2. While the postage rates are probably going to increase on a yearly basis from now on, they will be increasing at the pace of inflation. That means that any gains you see have already been eaten away in purchasing power through inflation.

3. Unless you own a stamp business, it will be nearly impossible to sell them for the current face value. Just because they have a specific face value doesn’t mean people will be willing to pay that face value for them. In fact, you can buy stamps today at 10% below their face value which makes investing in the forever stamp seem even less appealing.

4. Even if you can get the current face value for them, fees will destroy any profit you make. Auction fees, paypal fees, etc will wipe out any gains you may have thought you could make. You would need to sell the stamps in huge quantities to simply break even and not many people need that many stamps these days.

5. For those of you who would be willing to buy thousands of forever stamps to eek out a small profit, you may not be able to. The law makers figured that some would try to invest in the forever stamp, so the forever stamp is only to be distributed in “reasonable quantities” to customers according to the law.

In the end, the forever stamp is a convenience item so you don’t have to make extra trips to the post office when postal rates change in the future. While it makes sense to pick up a supply of them that will last you 6 months to a year, it makes no sense to invest in them.

Update: The forever stamp goes on sale April 12 for $0.41 – since this is the same as the new postal rates, you won’t even get a 4.9% return on your money making it even less worthwhile. In fact, the only time (ther than for convenience) to stock up on them would be right before the next stamp increase from $0.41 to a new price.


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March 22nd, 2007
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Comment Number:
1
Written by:
My Two Dollars - A place to discuss money..for the rest of us. » Thursday Morning Money - Still No Car Edition.
Posted on:
March 22, 2007 at 9:25 am

[...] Personal Finance Advice explains why the Forever Stamp is a bad investment. [...]

Comment Number:
2
Written by:
Productivity501
Posted on:
March 22, 2007 at 9:38 am

I have a ton of stamps from several rates back. When I want to use them I have to find 1 and 2 cent stamps. The forever stamp seems like a good investment in terms of saving time.

The only way they would make sense from a money standpoint is if the cost of delivering a letter was to suddenly skyrocket. While I suppose this is possible, the probability is low enough that it would be a bad place to invest much money.

Comment Number:
3
Written by:
Clever Dude
Posted on:
March 22, 2007 at 10:32 am

I wouldn’t mind buying, say, 100-150 of them. That would normally last me years at this point for bills, but we send about 30 Christmas cards each year. Also, we have to send about 40-50 baby shower invites for my in-laws soon (don’t need a forever stamp for that since it’s before the rate increase, but might as well get them all at once).

Comment Number:
4
Written by:
girlrobot’s guide to the internet! » The Not So Forever Stamp
Posted on:
March 22, 2007 at 1:03 pm

[...] 5 Reasons Why The Forever Stamp Is A Lousy Investment [...]

Comment Number:
5
Written by:
~Dawn
Posted on:
March 22, 2007 at 4:15 pm

I felt that way as well- it is a waste! Why don’t they just put out a PR notice that the 1st class stamps are now ‘forever stamps’

Comment Number:
6
Written by:
ForeverStamps
Posted on:
April 14, 2007 at 9:33 pm

Are Forever Stamps a distraction to the fact that the public is subsidizing bulk (junk) mail? New federal law will allow for annual increases in the cost of mailing a first class letter. Perhaps we will even see semi-annual increases with increased transportation costs and less demand for private first-class mail.

Bulk (junk) mailers spend as little as 12.7 cents per piece of mail. They have only seen their rates increase 61 percent since 1975, while the new rate increase to 41 cents represents a 223 percent increase to the general public over the same time period. With the advent of Forever Stamps and this new legislation, the writing on the wall is pretty clear, first-class postal hikes are going to be more frequent. The USPS’s likely response: If you don’t like it, buy some Forever Stamps now and lock in the current rate forever.

Comment Number:
7
Written by:
Henry Porter
Posted on:
April 24, 2007 at 9:06 am

What about buying them the day (or week) before the next increase, then sell them in the following weeks? Over 10,000 Mail & Parcel Centers across the country will by them in quantities of 100 sheets or more. The return would be 5 to 8%, depending on the increase, within a fews days.
But the problem will be that the Postal Service will not print enough of them, so that there will be no forever stamps available the year of the next increase.

Comment Number:
8
Written by:
In re: Forever? Forever ever? « In re:
Posted on:
May 10, 2007 at 10:24 pm

[...] one should invest in these now (apparently forgetting the time value of money and inflation, see here if you don’t follow) The comments on their post seem to sort out the issue, but it leaves one [...]

Comment Number:
9
Written by:
The Money
Posted on:
March 13, 2009 at 2:40 pm

Let’s see 4.8% return on investment, almost guaranteed annually, and that is a bad investment because the cost of how you live and what you buy will go up as well. That makes sense, to whom exactly, you will these cost no matter what you do, so being able to get a FS for the times that things change in the future is not a bad idea economically, even if it only saves you money, Stamps go from 42-44-46-48-50-52-54-56-58-60 in one decade and you have a 42 cent stamp that is worth 60 cents, looks like a great investment, and imagine longer, 20 years, and its simple, you buy 20 a week at 8.40 and 52 weeks you spent

Comment Number:
10
Written by:
Jo Bickham
Posted on:
May 31, 2009 at 7:39 pm

I am 84 years old – I’ve never heard of Forever stamps. If you use them for postage don’t you have to add stamps for a letter to be mailed. It doesn’t sound like much of an investment to me. LOOK I’m confused – can you explain these stamps to me.

Comment Number:
11
Written by:
Derick
Posted on:
March 18, 2011 at 8:54 pm

I bought a page of Forever stamps a few years ago. I rarely use stamps, as I just don’t send many letters.

I guess I paid the .41 cents, but now a typical stamp costs .44 so..

I win.



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