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June, 2007


A handy inflation fighting investment now may also be "forever." In 1971, the cost of mailing a first class letter was just $0.06. After an average compound annual rate increase of 5.5%, today the cost for the same thing is $0.41. In all probability, it will be higher still be in the next several years, as inflation continues to decrease the value of one's hard earned dollars.

But the U.S. Postal Service has seen fit to issue a stamp, now on sale for just $0.41 each at postal centers and supermarkets around the country, that will continue to be sufficient to pay for delivery of an ounce of first class mail forever, regardless of what one paid for it. Fittingly called the "Forever Stamp," this allows U.S. postal patrons everywhere to buy, for just $0.41 now, what will almost certainly be worth significantly more in the future.

Forever Stamps can be bought in any desired amount and then used immediately or whenever desired later, without any required holding period, transaction and management fees, or penalty for early redemption. When Val and I go grocery shopping, the cashier often asks if we want any stamps. So long as they are selling Forever Stamps at $0.41, we shall buy a set of 20 every chance we get, at least till we have acquired close to a lifetime supply. It's like getting a dollar's worth of postage for $0.90, then $0.80, etc., depending on how high the First Class mailing eventually gets to be. The discount will keep getting steeper the longer these stamps are held before use and the more regular postage continues to climb.

There must be a catch, right? Sure enough, by law, postal rates cannot now go up more than a specified, reasonably low inflation base rate. Moreover, the ones costing just $0.41 each will probably be limited to those selling before the next rate hike, at which point the price for buying more Forever Stamps would almost certainly go up to the new one-ounce First Class postage cost, etc. (So, the early bird buyer probably gets the best long-term deal.) Then too, technology is altering the ways we do all sorts of things. Maybe, before one uses all her or his Forever Stamps, we shall all be doing everything (letters, financial transactions, and so forth) by e-mail, holographic-space-reflector-beam, or whatever. But I doubt it.

By my estimates, today's Forever Stamps trump most tax free Certificates of Deposit or Short-Term bonds and, starting after we have another jump in rates, are probably going to continue to be sources of a little extra savings each time one mails a card or letter.

So, if you like the convenience of not having to stand at the post office waiting for your number to be called to get the latest new denomination, when prices inevitably go up again, and you kind of dig free money from the government, stock up, but just do not go overboard. (I read about one fellow who bought $8000 worth of them as soon as they were issued! That may well be more than he can ever use, and these stamps cannot be legally resold.)

With a little advance purchasing shrewdness now, if your mailing needs are modest you or your heirs could conceivably sit back and use discounted stamps indefinitely, perhaps forever.


Larry is not a professional. Don't take him seriously!

Actually, the investment article provided here is for general information only and should not be considered as professional advice, a solicitation to buy or sell any security, or the Word of God. Investors are encouraged to do their own research while considering their personal goals and circumstances, or consult their own professional financial advisors, before making investment decisions. Neither Larry nor LARVALBUG will be liable for any losses sustained by any visitor to this site.

(Disclosure statement: Larry and Val have holdings in some of the suggested assets but do not "make a market" in any of them and do not derive any direct benefit from recommending them, except perhaps for a bit of smug self-satisfaction.)

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