Sunday, June 3, 2007

Should you buy the "Forever stamp"?

It may seem enticing to buy the "Forever stamps" that will always be accepted no matter if the cost of 1st class postage jumps to $1.00.  But, if you actually look at the trends in a) postage increases and b) 1st class mail decline it is not a good economic argument.

Imagine today in 2007 you bought 100 "Forever stamps" for $0.42 each ($42.00 in stamps).  Due to inflation of 3%, those stamps would be worth $75.86 in 2027 dollars.  However, given that stamps increase a max of 10 cents per decade, those stamps would likely only _really_ be worth $62.00 (~$16 less than you could buy stamps for in 2027 dollars).

Furthermore, if you just invested the $42.00 at 5% interest (there are many great online savings offers to choose from now that will pay that with a liquid account), that $42.00 would have grown to $111.44 in 2027, an increase of almost three times your initial principal.  You could buy the $62.00 worth of stamps in 2027 and still have about $60 in your pocket.

So, save your money ;-)

Rising cost of U.S. Postage Stamps
Every decade since the 1970s has seen around eight to ten cents increase in the cost of a stamp.

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