Forever stamps are not a good financial investment

Saturday, May 15, 2010

The US Post Office's "Forever" stamps have seemed like a pretty good buy these days. It's seemed like the cost of postage has gone up substantially in recent years.

Of course, this needs to be adjusted for inflation. Over such a long time, the deflation measure you choose makes quite a difference. From my perspective, I care most about a consumer price index. Unfortunately, once you adjust for inflation, it appears that the real cost of stamps has been pretty steady. In other words, if you'd bought a "Forever" stamp in 1958 and your friend bought an instrument that would return inflation-level returns that same year, by 2009 you'd still have a valid stamp and he'd have just enough money to buy a stamp today.

But here's the thing -- for the post office, the future is not like the past. Mail volumes have been plummetting and USPS is under serious financial stress. Maybe that means that there will be further increases in stamp prices that will make "Forever" stamps a good buy. Or maybe they'll reduce services, making the "Forever" stamps less useful. Either way, the purchase is worth it for me because of the reduced hassle, even if they're not a good financial instrument.


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