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Price of stamps going up again? Don't run out and buy liberty stamps just yet

By 4L

Once again, the price of stamps is going up, which will cause a lot of grumbling at the 1 cent stamp line, but is really not that big a deal (not that I'm not complaining about it). See Stamps to Cost a Penny More.

It hasn't even been a year since they went up to 41 cents. Now they will be 42 cents until the next postal rate increase (which, inevitably, will be before you know it). The Liberty "Forever" stamp, which costs 41 cents now and will apparently cost 42 cents when the rate goes up, is still available. I would imagine a lot of people will hurry up and buy it now from the USPS. Apparently they have an excess of 5 billion stamps ready for when this happens.

This is their scheme anyway, but it's probably not that much of a worthwhile investment given that 100 stamps will probably last the average person about 4 years (averaging 2 first class mailings a month). If you buy enough to actually last a lifetime, you probably are better off investing that amount in a five year CD. Or on Yahoo stock. (Can someone say, "proxy fight!").

Why hurrying up to buy the 41 cent Liberty stamp isn't that great an idea. Charting the price of stamps in the last few years, one site gives one pictorial representation of the rising costs.

I'll start with the cost in 1985, since I remember when the cost went up to a quarter and I thought that was neat. According to one site, in 1985, a first class postage stamp cost 22 cents. It jumped to 25 cents in 1988, to 29 cents in 1991, 32 cents in '95, 33 cents in 99, and since then has jumped up pretty consistently - 34 cents in 2001, 37 cents in 2002, 39 cents in 2006, 41 cents in 2007, and now 42 cents in 2008. Focusing just on the last eight years, prices have jumped slightly, from 34 cents to 42 cents. In the last five years, the percentage increase has been a little more.

Assuming you had bought the equivalent of 200 liberty stamps the then-current Liberty stamp rate of 34 cents in 2001, you would have used up your first 100 in 2005 and your final 100 this year. 34 cents*200 = $68. If you had bought them at the current prevailing prices, your price would have roughly been as follows: .34*25+.37*25+.37*25+.37*25+.37*25+.39*25+.41*25+.42*25, or $76. So, buying eight years worth of stamps saved you less than $10. Even if you invested that $68 in the typical 1% savings account, you probably would have made your $10 over that same period. Hopefully better if you're a little more savvy or use an online brokerage account with higher rates.

At the current pace (and even assuming a little more), stamps in 4 or 8 years will be between 46 and 50 cents for a first class stamp. Even if it's 53 cents in 2016, you're really not saving that much money buy hurrying up and buying now. You're saving about the same $10, maybe $20 if it really gets out of hand. On the plus side you don't have to buy the silly 1 cent stamps every couple years. On the minus side, you're losing money. But, if you like spending money on foolish investments, the USPS store is waiting for your Liberty stamp purchases.

Full post as published by The Once and Future Lawyer on February 11, 2008 (boomark / email).

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