($100 of Forever Stamps)
Investment Idea: $100 invested in 222 Forever Stamps.
Total Investment: $100
Total Time Cost: 00:25:00
Extra Costs: The total cost of this investment was actually only $99.90 (222 Forever Stamps at $.45 each) so to make it a solid $100 investment, I have included an extra $.10 to be stored with the rest of this investment.
Total Time Spent on Investment: 10 minutes driving to post office. 10 minutes waiting on line. 5 minutes for total transaction.
Research and Preparation:
To make this investment all I needed to do was head to the local post office. Unfortunately, due to budget cuts and scale backs, the only time I could actually go to the post office was during the morning on a Saturday. Once I got there I waited on line and was helped rather quickly. I asked the clerk if he sold Forever Stamps, and in reply he said, “Oh boy do we!” I then asked him how much a Forever Stamp was: “45 cents,” was his reply. I took out my phone and divided 100 by .45 and ended up with 222.22 repeating. Since you can’t buy a partial Forever Stamp, I then asked the clerk for 222 of them. This didn’t really seem to phase him and he proceeded to take out two rolls of 100 stamps each, one sheet of 20 stamps, and then two solo stamps. He placed them on his scale and rang up the total of $99.90.
(222 Forever Stamps)
(Post Office receipt)
Reason for Investment:
The idea for this investment came from a lot of places. I think the allure of something lasting forever is what really sold me on it: the fact that you could spend money today and hedge your risk against all future risks and problems the world might throw at you. The Forever Stamp, which went on sale starting back in April, 2007, initially cost only 41 cents.* It now costs 45 cents and doesn’t seem like it will cost any less soon. These stamps come with the promise that they can be used forever and will always be good for mailing a first class letter weighing up to one ounce, even if normal postage rates increase. The main problem with this hedge, though, is that the Post Office does not raise the price of stamps without due notice. So, anyone can bandwagon onto this investment the day before the price increase and gain the same benefits I am hoping to gain. However, if current trends continue, we are almost guaranteed to see the price of stamps rise over the next two years. If it raises at least two cents a stamp I am looking at a solid 5% return on them. But this does not account for the lost chances I had if I had spent the $100 on a different investment while waiting for the Post General Master to announce another round of postage increases.
Hopefully, the return on this investment in Forever Stamps is the post office continues to go over budget and lose money. In response, they increase the cost of stamps. This makes the price I paid for them cheaper than the amount they would then cost. This has already happened as recently as January 22, 2012. Back in January the cost of a stamp increased by one cent to 45 cents total. Since the creation of Forever Stamps in April 2007, the cost has risen by four cents, almost a penny a year. If you had purchased $100 worth of Forever Stamps back in April 2007, at 41 cents each (for a total of 243 Forever Stamps and 0.37 Cents left over that investment), they would now be worth $109.72 (243 * .45 + 0.37) for a total return of 9.72% over slightly more than five years. This is an annualized return of 1.8%.* My hope for this investment is that this trend keeps up.
I do realize that I don’t look at costs of investing that money in a better place and then buying the stamps directly before an increase, which would be the best strategy for making gains on Forever Stamps.
Another problem to note is the exit strategy for this investment. It is not very convenient or easy to sell stamps and make money off of them, or the post office would be in a lot better shape.