How I, sort of, make money off 'Forever' stamps — and you can too!

How would you like to be able to put money into an asset that’s all but guaranteed to rise 10% this year, regardless of what the stock market does?

An asset that has fallen in value only once in the past 16 years has risen 11 times during that period and — thanks to a new proposal filed on April 10 — is all but guaranteed to rise for a 12th time this summer? And that over its lifetime has risen substantially more than the cost of living has?

Welcome to the strange world of Forever stamps that you can buy today and use to mail a letter forever, without having to shell out any additional money when postal rates go up. (Which as the chart below shows, happens pretty much every year.)

Forever stamps are about the only asset I can think of that has never gone down in value except for a brief dip in 2016 when a special surcharge to help the post office recover from the decline in mail volume during the Great Recession of 2008-09 expired. That dip will likely never be repeated.

Meanwhile, this happens to be an especially good year for the value of Forevers, which rose 5% in January and will rise almost 5% more in July if the Postal Regulatory Commission approves the rate request the postal service proposed earlier this month.

It would be the first time in history that the postal service has boosted first-class mail rates twice in a single year. However, it poses no problem at all for those of us who use Forevers, as I’ve done since the first one was issued in May of 2007.

But before we proceed, let me briefly explain what Forevers are, for those of you who don’t use postage stamps very much.

A Forever stamp can be used — forever — to cover the cost of mailing a piece of first-class mail, such as a birthday card, that weighs one ounce or less.

So, if you bought a roll of 100 Forevers at your post office last year for $60, you can use them to cover the current 63-cent cost, which is likely to rise to 66 cents in July. (That increase — to 66 cents from 60 cents — is the 10% rise that I’m talking about.)

Since the first Forever stamp was issued in 2007, its value has risen by 54% to the current 63 cents from 41 cents 16 years ago.

That’s substantially more than the increase in the Consumer Price Index, which the Bureau of Labor Statistics says has risen 46% since the first Forever was issued.

If — make that when — the pending increase to 66 cents goes through in July, Forevers’ value will have risen by 61%.

And we’re looking at after-tax numbers because the increase in the stamps’ value isn’t taxable. Also non-taxable is Forevers’ biggest — albeit non-financial — benefit: the fact that you don’t have to buy one, two, three or five-cent stamps every time the rate goes up or else overpay by using two pre-rate-hike stamps.

Sure, the postal service gets shorted a bit by Forevers by not getting all the postage revenue it’s due at the current rate. But it also benefits by making it easier and cheaper for retail customers to use stamps to mail things, which has probably kept first-class mail volume, which declines every year and is down 50% from when Forevers were first issued, from falling even faster than it has.

It also saves the time, effort, and money it would cost the postal service to print and distribute zillions of low-denomination stamps every time the first-class price goes up.

To be sure — three of my favorite weasel words — Forever stamps aren’t an investment the way that stocks are.

For starters, the Standard & Poor’s 500 index has licked Forevers badly when it comes to returns on investment. According to Vanguard, investors who hold Admiral shares in its S&P 500 fund got pre-tax returns of 269% (including reinvested dividends) from May of 2007, when the first Forevers appeared, through March of this year. Even if you exclude dividends, those shares rose 169%, lots more than Forevers did.

Second, unless you buy a big batch of Forevers and somehow manage to sell them to people for more than you paid but less than the post office is charging, there’s no way to cash them in at a profit.

But it sure is fun to own 100 or 200 Forevers, use them gradually and get to feel good about yourself as you watch postal rates rise.

Saving a few bucks on postage and getting to feel that you’ve outwitted the system won’t make you rich. But, at least in my case, it sure can make you smile.

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