Some people have suggested stockpiling Forever stamps as an investment, speculating the stamps could increase in value over time due to postal service inflation. This comprehensive guide provides an objective analysis on the viability of Forever stamps as an investment and covers factors like usage, pricing history, risks, and alternative stamp investment approaches.
(Disclaimer: This article is for informational and educational purposes only. It does not constitute financial or investment advice. Please conduct your own due diligence before making any investment.)
Table of Contents
What are Forever Stamps?
Forever stamps are a type of first-class postage stamps issued by the United States Postal Service (USPS) that maintain validity after purchase regardless of future increases in the cost of a first-class mail stamp. This contrasts with traditional definitive stamps that are priced at the current postal rate and require added postage if rates rise.
Forever stamps were introduced by the USPS in 2007 to simplify the pricing structure and eliminate the need for supplemental stamps whenever rates change. The stamps depict non-specific themes like flowers, flags, animals, or landscapes – unlike commemorative stamps honoring specific events or people. Prices for Forever stamps are set at the prevailing first-class postage rate at time of purchase.
Why Do People Hoard Forever Stamps?
Some people advocate stockpiling rolls of Forever stamps for these primary reasons:
- As a hedge against inflation if the USPS increases stamp prices – the theory is Forever stamps locked in at older lower prices would rise in value
- To save money long-term by buying stamps at current prices to use for future postage needs
- Low minimum investment of $11 to buy a book of 10 stamps
- Stamps take up little storage space compared to other assets
- Established history of USPS raising stamp prices due to inflation
- Nostalgic appeal of stamps compared to modern digital payments
However, there are also strong arguments against treating Forever stamps as an investment vehicle as we’ll explore.
Do Forever Stamp Prices Increase with Inflation?
Forever stamps are priced at the USPS first-class mail single-piece letter rate at the time they are purchased. Although the denominations printed on Forever stamps do not change, the USPS does periodically increase the initial selling price of new Forever stamps to reflect the updated current first-class letter mail rate.
Since 2007, there have been several Forever stamp issue prices including $0.41, $0.42, $0.44, $0.47, $0.49, $0.50 and most recently $0.58 in 2022. Additional increases are likely over time aligned with USPS rate changes.
Therefore, while existing Forever stamps are fixed, new Forever stamps do increase in cost over time with inflation.
What is the USPS Rate Hike History?
The USPS has increased the price of first-class postage 32 times over the past 50 years:
- The price has gone up 19 out of the last 23 years.
- The average annual increase is 1.9%.
- The largest hikes were in 1975 (16%), 1991 (22%), and 2022 (11.9%)
These consistent historical postage rate increases provide context on why some people expect the value of older Forever stamps to rise over newly issued ones. However, actual ROI depends on purchase timing, holding periods, and usage demand.
What is the Breakeven Time Horizon?
The breakeven point where the value of your Forever stamps exceeds the original purchase price depends greatly on timing of rate hikes.
For example, if you bought Forever stamps in 2020 for $0.55 that the USPS now sells for $0.60, it takes 45 months to recoup your investment if using one stamp per month in postage based on saving $0.05 per letter.
But given inflation, the USPS may soon increase standard stamps to $0.65. This would shorten the breakeven period to just 14 months for the $0.55 Forever stamps.
Breakeven horizons range from under 1 year to 10+ years based on purchase timing, holding duration, and rate hike cycles.
Revenue Generation from USPS Stamp Sales
In fiscal year 2021, the USPS earned $1.48 billion in revenue from postage stamp sales. However, this represented only 1.5% of the USPS’s total annual operating revenues of $77.1 billion.
While meaningful, the financial materiality of stamp sales is relatively small compared to core service offerings. This diminishes the view of Forever stamps as an effective mechanism to fund the USPS long-term or drive large inflationary profits.
Key Risk Factors of a Forever Stamp Investment Strategy
Before hoarding Forever stamps as an inflation hedge, consider these substantial risks:
- No secondary market – Difficult to sell or exchange stamps at higher valuations.
- Storage costs – Space needed to store over years erodes ROI.
- Damage/loss – Stamps could get lost, stolen or destroyed over time.
- Rate changes – No guarantee USPS will raise prices consistently with inflation.
- Alternatives emerge – Apps and digital postage undermine stamp usage over time.
- Opportunity cost – Capital trapped in stamps cannot be invested elsewhere.
- Timing – Need to buy right before, not after, a rate hike.
- Effort required – Time spent developing a stamp investment strategy may not be worth minimal upside.
Stamps lack the dynamics and upside of other inflation hedges like real estate or equities.
Key Statistics on USPS Mail Volumes
- First-class mail volume peaked in 2001 at 103.6 billion pieces.
- Total mail volume was 94.5 billion pieces in 2021, down from 168 billion in 2001.
- 44% of bills and statements are now handled electronically reducing mail.
- Only 4% of major businesses say post office is their primary communications channel.
Declining mail usage driven by digitization weakens the upside case for Forever stamps as fewer people rely on postal-mail.
Most Lucrative Ways to Invest in Stamps
For investors focused specifically on stamps, the most profitable approaches involve:
- Purchasing ultra rare, antique, or collectible stamps – Scarce one-of-a-kind historical stamps have sold for many millions. Requires extensive expertise.
- Buying specialized proprietary stamp indices – Structured portfolios based on quantitative strategies. Less risky way to gain exposure.
- Flipping undervalued collectible stamps – Acquire stamps cheaply through estate sales or auctions and resell at market prices. Must identify hidden gems.
- Diversifying across many countries – Leverages relative currency values and economic conditions driving demand.
- Adding tangibles to a portfolio – Stamps as an alternative asset class beyond stocks and bonds.
Standard postage stamps do not maximize collectible value like certified rarities.
Alternative Inflation Hedge Assets
If seeking an inflation hedge, assets with clearer track records against inflation include:
- Real estate – Hard asset that rises in value with inflation over decades.
- Equities – Stocks historically generate positive long-run inflation-adjusted returns.
- Gold – Tangible scarce metal that serves as traditional inflation hedge.
- TIPS – Treasury Inflation-Protected Securities directly linked to CPI.
- Commodities – Real assets like oil, corn, copper often rise with inflation.
- Cryptocurrency – Digital scarcity appeals to some inflation minded investors.
These options provide more upside exposure to inflationary forces over time.
Final Thoughts on Forever Stamp Investment Viability
While postage rates often increase with inflation, stamps appear too small in scope to meaningfully hedge broader economic forces. Lagging mail volumes, storage hassles, and liquidity challenges further diminish the inflation protection upside case.
Occasionally purchasing extra Forever stamps before a major postal hike makes logical sense for budgeting reasons if you’re a heavy postal user. But accumulating mass quantities of stamps strictly as a speculative investment or to resell at higher prices remains impractical compared to conventional asset classes.
Rather than trying to time Forever stamp investments, most investors are better served focusing efforts on broad market exposure through equities, real estate, and alternative assets less vulnerable to disruption.
Frequently Asked Questions
What rate of return can you expect from Forever stamp investment?
Rackateers have advertised Forever stamp investments with exaggerated claims of 20-30%+ returns. In reality, investing in standard postage stamps will likely only deliver 1-3% annualized returns net of inflation over multi-year holding periods in a best-case scenario.
How many Forever stamps should I buy for investment?
There is no ideal minimum or maximum. With stamps offering limited upside, invest only discretionary amounts that won’t be needed for other goals. Avoid getting overexposed given the relative lack of liquidity.
Should I buy Forever stamp rolls or sheets?
For convenience, rolls with 100 stamps allow easier storage. But sheets of 20 have more space between stamps helping prevent damage over time. Either format works fine as an investment.
How long do Forever stamps last?
The self-adhesive stamps can remain usable for up to 3 years if stored properly away from heat, humidity, and direct sunlight exposure. Take care to minimize damage and discernability when saving stamps.
Is now a good time to stock up on Forever stamps?
With inflation high in 2022, buying some extra Forever stamps near term as the USPS will likely hike prices again in the coming months makes logical sense if you regularly mail letters. But long term investment viability remains murky.
What are the best Forever stamps to invest in?
No specific design holds more inherent investment value. Since new stamps get repriced higher, those bought at least 1-2 years earlier have the most upside as long as still in usable condition.
Can you exchange Forever stamps for cash?
No, there is no official method to easily cash in or sell back Forever stamps to the USPS or secondary dealers. You must use them for postage or try privately selling to collectors at likely below face value.
How do you sell used Forever stamps?
Your options are very limited for selling used Forever stamps since they can’t be reliably verified or differentiated from counterfeits. Most collectors only want pristine mint stamps.
Can Forever stamps expire or be discontinued?
Yes, the USPS can technically discontinue the Forever stamp program or declare existing ones invalid although highly unlikely. As legal tender backed by the government, the stamps carry minimal actual risk of becoming worthless.
