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Should We Be Stockpiling Forever Stamps?
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The US Postal Service this week implemented their newly inflated rates, again. And to distract us from the fact that the government agency is sticking it to us despite continuing making hundreds of millions of dollars in profit, they rolled out the new Forever Stamp.
The Forever Stamp allows you to buy a 41-cent stamp today and use it for a regular letter, like, say, a nice card to your favorite city-based blog with a check enclosed made out to Cash, and mail it in the future even if the rate is no longer 41 cents.
What this does, in effect is kill the 1- and 2-cent add-on stamps, like the one we just had to go get at the post office now that the rate is no longer 39 cents to mail our rent check across town.
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So the question is, should we be stocking up on these new 41-cent stamps before the next series of increases hit?
Nathaniel Rich of Slate says hells no:
Absolutely not. Since 1971, postal rates have increased more slowly than the actual inflation rate, as measured by the U.S. Consumer Price Index. So, despite the numerous rate hikes over the last 36 years, stamps have actually been getting cheaper. The 20-cent stamp from 1981, for instance, would be equivalent to 45 cents in today's dollars—which makes today's rate 10 percent cheaper than it was 26 years ago. Should this historical pattern hold, you'd be paying more for today's forever stamps than you would for any stamp in the future, no matter how high the rate goes.
Terrance Odean, a professor at the University of California at Berkeley who specializes in behavioral finance, doesn't think much of Forever Stamps as a financial play. You can't buy enough of them to make any serious money, he says, and you can't sell them at a profit. However, Odean says, "There is some psychological benefit you feel if you think you're being clever and getting a good deal." But then, he hastens to add, "You'll feel less than clever if you're the last person left using postage stamps to mail in your utility bills when everyone else is paying them online, postage-free." Killjoy.
The bottom line: Unless you time your purchases right, Forever Stamps aren't a good financial speculation. But you can't lose money, either -- you can always use them to mail letters.
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