Should You "Invest" in US Forever Stamps?


The USPS has announced yet another postal rate hike, this one to take effect May 11, 2009. The 1-ounce domestic letter rate will rise 2 cents, to 44 cents, and the international one ounce rate will rise even more, to 98 cents. Rates for many other mailing services will also increase.

Postal customers can, however, use Forever Stamps — regardless of when they were purchased — to avoid some of the bite of this and future rate hikes: Forever Stamps can be used to mail 1-ounce domestic letters after the price change without the need for additional postage. Forever Stamps are widely
available through post offices, retail outlets such as grocery stores, and online, and the USPS seems to be encouraging their use. Right now their price is 42 cents, but they'll go up to 44 cents on May 11. Forever Stamps purchased before the last rate increase (in May 2008) cost 41 cents, but regardless of what was paid for a Forever Stamp, it can be used to pay whatever the 1 ounce domestic letter rate happens to be at the time.

So, should we stock up on Forever Stamps as a means to hedge against postal increases?

No. Although we deplore the inefficiencies of the USPS which have contributed to the need for this rate hike (just like we deplore the inefficiencies of the American Big 3 automakers) the need for the increase is there. But investing in Forever Stamps by buying large quantities is a bad idea, because postal rate increases, since 1971 at least, have historically been lower than the inflation rate. Despite the numerous postal rate hikes during that period, the relative cost of stamps has actually gone down. The overall inflation rate has been higher than the postal increases, so the dollar, relative to the cost of a stamp, is worth less now than it ever has been. If the same pattern holds, as the dollar continues to go down, you'd be paying more for today's Forever Stamps than you would in the future for a "regular" stamp.

Several other countries offer the equivalent of the US Forever Stamp: the United Kingdom, Canada, France, Belgium, Finland, Norway, Sweden among others. The Forever Stamps are not a bad thing for postal customers, but they'd be a bad long-term investment.