Is it a good idea to invest in "forever" stamps?

Answers to your questions about the news.
May 17 2007 4:10 PM

Should I Invest in "Forever" Stamps?

Absolutely not.

Illustration by Robert Neubecker. Click image to expand.

The postal rate climbed 2 cents on Monday, about a month after the United States Postal Service introduced its new "forever" stamp. As of last week, the USPS had sold more than $82 million worth of the forever stamps, which lock in the 41-cent rate for eternity. One man in Pennsylvania walked into a post office and made an $8,000 investment on his own. Should we all be stocking up?

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.

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In fact, this pattern must hold—as a matter of law. In December, President Bush signed the Postal Accountability and Enhancement Act, which ensures that future price increases will be kept below an inflation-based ceiling. In other words, postage hikes will never surpass inflation—and the forever stamp will never become a good investment. Incidentally, the USPS announced the introduction of the forever stamp less than two months after Bush signed the act into law.

The USPS is not the first postal agency to catch on to the benefits of a forever stamp, which in philatelic circles is known by a less sexy moniker, "non-value indicator." Canada introduced them last November, joining Finland, Israel, the United Kingdom, Belgium, France, Norway, Monaco, and Sweden, among others.

American forever stamps would have been a good investment if they'd been introduced much earlier. The 2-cent stamp from 1919 would have been a real bargain, at a cost of 24 cents in today's dollars; so would 1952's 3-cent stamp (23 cents today). A forever stamp would have been attractive to the consumer as late as 1971—the year the USPS was formed—when first-class postage was just 6 cents, equal to 31 cents today. The biggest rip-off in the modern era? The 13-cent stamp from 1975—which would be 50 cents today.

Got a question about today's news? Ask the Explainer.

Nathaniel Rich is the author ofThe Mayor's Tongue, a novel, and San Francisco Noir, a book of film criticism.

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