Why You Shouldn't Invest in Forever Stamps

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When the USPS introduced Forever Stamps -- First Class stamps that are valid forever, regardless of future rate increases -- my friends immediately had a clever idea: invest in them. Sitting around at a cocktail party, we talked it over -- judging from recent postal rate increases, it sure seemed like buying Forever Stamps and reselling them in the future (when surely the postal rates will involve selling your organs) would be a great investment opportunity. While we didn't bother to actually research it, I think we were all secretly thinking about leaving the party to go stock up on Forever Stamps.

Well, it turns out that Forever Stamps are guaranteed to be a bad investment idea, both because of inflation in the modern era and because of a pesky law that went into effect just before the stamps were announced. Slate's Explainer column did the research, even linking to the story of a fellow who recently bought $8,000 worth of Forever Stamps (that's 19,512 stamps). Anyway, The Explainer gives us some data to chew on:

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.

In fact, this pattern must hold—as a matter of law. (...)

Read the whole article and also check out Lifehacker's (retracted) "Save the new forever postage stamp" article. Also: this blog post is not intended to give investment advice (or non-advice), and is presented for trivia value only!

So...got any investment schemes that seemed like a great idea on the surface, but turned out not to be worth it?

August 14, 2007 - 8:08am
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