So as you’ve probably heard with the recent postage prices being raised, USPS (United States Postal Service) has introduce the Forever Stamp. I actually picked up a pack of 20 when I was at Safeway earlier this week. Nothing too fancy. Has a picture of a bell and on the said it says: USA FIRST-CLASS FOREVER. Ungsunghero and I jokingly discussed about “investing” in forever stamps and wait a number of years and sell them back out. However, we’ve decided the return would be less than ideal, probably worst than the 5% interest rate we get at an online savings account.
Then I read this article: Should I Invest in “Forever” Stamps? (from Digg) – Absolutely not.:
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.
However, the forever stamp is an excellent idea and although it may be a less than ideal investment plan, the idea behind it has been long due. It would certainly make life easier as you wouldn’t have to go to the post office and purchase 2¢ stamps immediately after a raise. It’s definitely a lot more convenient to the consumer. Like right now, I have 3 39¢ stamps left which probably won’t be used until I have to mail a letter that’s more than 1oz, or the next time I drop by the post office to purchase some more 2¢ stamps, which hardly ever happens as the post office is a crazy place I tried to avoid at all costs.
However, lets take a step back and look at the investment plan. The plan may actually work if you’re precise. If you were to purchase a whole bunch of forever stamps right before the next raise (let’s assume 41¢ to 43¢), meaning to purchase it at 41¢ and sell them at 43¢. If you could sell them all off in 3 months, that’s a 19.5% APR. So an $8,000 investment in 3 short months have become $8390.24. Of course this is assuming you can sell it at face value and so on.
But let’s take the most ideal situation. Currently you get 5% back on certain credit cards when you make purchases at supermarkets, making a 41¢ stamp closer a little less than 39¢. Lets say you offer a 1¢ discount to those who purchase from you (selling it for 42¢ instead of 43¢), basically giving them a 2.3% discount from the post office rates. If you can sell off all your stamps in 3 months, that’s a 7.8% gain in 3 months, or 31.3% APR. However, as noted, these are the ideal conditions and you can only do it every time USPS decides to bump fees, however those are usually announced far in ahead and you can prepare yourself if you’re planning to do this.
Another interesting topic was brought up while talking to Ungsunghero and somehow the topic of working at the post office came up. I divulged my ideas of how the post office should change and become extremely competitive. Today UPS, FedEx, and DHL, offer online postage printing with no extra fees. You get the same rates online as you would at your local shipping outlet. However, the inconvenient part of UPS, FedEx, and DHL is that you actually have to drop it off at a shipping counter, either that be Kinkos or Office Depot, it’s not as convenient as just dropping it into your mail box or giving it to your postman, which you know comes every day around a certain time.
USPS already offers free postage printing for Priority Mail and Express Mail, but for first class, media mail, and parcel mail, they are only offering it through other services like Pitney Bowes, which charges a fee every time you use them. Just like I find the fact that E-file for taxes charges you a fee to save them time is ridiculous, it’s the same with USPS charging a fee for you to print postage. With online postage printing, you don’t have to hire as many clerks to man the post office, save the cost of printing stamps as the customer will print their own, and every letter will have a verified address and maybe even a barcode to help sorting.
However, to print USPS postage without any fees today, you have to go through a hack via PayPal: Print USPS First Class, Media Mail, Parcel Mail Postage for FREE!
If only I could knock some sense into USPS and the IRS.