Tuesday, May 01, 2007

Forever stamp probably not a good investment

The Associated Press is asking the question - Does it make financial sense to buy up packs of the U.S. Postal Service's Forever stamp?

The answer - it depends.

"If you buy the Forever stamp and rates go up, the value of the stamp arguably goes up. So it might seem a good bet to buy up a bunch of Forever stamps to lock in the lower rate," writes AP staffer Vinnee Tong.

However, Tong points out,"...because by buying stamps that you don't use right away, you would be giving up the chance to use that money in another way. Economists call this an opportunity cost. Instead of sinking money into stamps that sit in a drawer until you finally get around to writing your holiday cards or thank-you notes, that money could be better used elsewhere, such as in an investment vehicle where it would earn more."

Columbia University business school associate professor Harborne Stuart is quoted in the article as saying, "I wouldn't buy it as an investment because it's a lousy investment."

Stuart, a professor in the school's Decision, Risk & Operations Division, said that while hoarding the stamp might not make financial sense, it might still appeal to the risk-averse consumers among us.

"If someone's going to torture themselves after the post office raises rates, for them, maybe they should buy a few extra," he said.

To read the entire article, click here.
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posted by Don Schilling at 2:22 PM