Post Office Savings Certificates

There are very few long term savings certificates that are tied to the rate of inflation but several years ago the United States Post Office effectively issued an even better investment vehicle. With the “First Class Forever” stamps the Post Office promised completely paid first class postage any time in the future. In 1960 the postage rate was 3c. According to to Bureau of Labor Statistics the rate of inflation during that 50 year period from 1960 should have produced a current postage rate of 22c. So the cost of first class postage has gone up at twice the rate of inflation over the last fifty years. It’s anybody’s guess whether the cost of first class postage will continue to increase at twice the rate of inflation but my guess is that it should. What has been holding down the inflation rate is technological development. Driving up the inflation rate has been labor and energy costs. Delivering letters is on the labor and energy side of the inflation curve. Further, declining postal use drives up unit costs so it would be hard to see how postage rates could go up less in the future than they have in the past. A Forever stamp could well provide a guaranteed service far into the future at a price that will be far less inflation adjusted than it will cost to buy that service at the time. Suppose you buy a bundle of $1000 Forevers on the discount postage market for say $800. In fifty years (if things go as they have in the last fifty), an inflation rate investment should have netted you a return of $5600. However, the first class postage that your Forevers could buy would be valued at $14000 and you could sell your stamps on the discount postage market at 80% or over $11000, twice the rate of inflation. Not a bad return.

Share on:
Shopping Cart
Scroll to Top