Forever Stamps

The USPS is raising rates again, or at least proposing it. I have very specific plans for when I’m appointed Postmaster General. But until then, I’ll just try to determine if the Forever Stamps are a good investment.

=RATE($A3-$A$2,0,-B$2,B3)*365
RATE(nper,pmt,pv,fv,type,guess)

nper = the number of days between 7/7/10 and 5/14/07
pmt = no payment
pv = if you bought your Forever Stamps back in May 2007, you would have paid $.41. It’s negative because that’s cash out to you.
fv = Today, you could presumably sell your stamps for $.44. If you hold them until January, you can get another $.02.
type = No payments, so type shouldn’t matter.
guess = Does anyone ever use this? Never had a need myself.

Compared to the S&P, the Forever Stamps kick ass. If the stock market wants to compete, it’s got some work to do. Specifically, it will need to be worth $1,686.43 by January 2nd.

=FV(.0316/365,A4-A2,0,-D2)
FV(rate,nper,pmt,pv,type)

rate = 3.16% is was the stamps will have returned. I convert that to a daily rate by dividing by 365.
nper = the number of days between 7/7/10 and 5/14/07. nper and rate have to be on the same terms; daily, yearly, monthly, etc.
pmt = none
pv = Theoretically, you pay cash out of $1,503.15 on 5/14/07
type = ignored yet again.

Do you think the stock market can do it? If it does, that means it will be a 101.06% increase (annualized) between now and then.

=RATE(A4-A3,0,-D3,1686.43)*365

In English: If we pay out $1,028.06 now and get $1,686.43 back on 1/2/2011, we will have made 101.06% on our money on an annual return basis (49.56% real increase over about 1/2 a year).

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3 thoughts on “Forever Stamps

  1. Looking backwards the stock market has been a dog when measure from the same stamp starting date. That’s the risk an equity investor takes. The maths above looks fine from a quick look

    But of course every day stamps aren’t meant to be a high risk/high return asset, or unfortunately a low risk/high return asset. So a better comparator would be the return from government bonds.

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