Forever Stamp idea being revived

MoneyLA

Here it comes again, along with the problems....

article

coinpictures

No problems as I see it. While it may not be a benefit to most consumers, it is a boon for small businesses that do mailings on a regular basis and that don't qualify for bulk mail rates. We're considering spending about $5,000 on these if they come to fruition.

MoneyLA

you are really going to spend $5,000 on stamps?

for that kind of mailing, don't you have a postage meter?

did you factor in the cost of applying stamps to letters?

coinpictures

Sure. That $5,000 may last us 5 years. The labor cost for applying stamps isn't much more than applying meters; they still would have to be done by hand. Other than mass mailings of 1,000+ pieces, our secretarial staff hand processes the outgoing mail anyway.

Bottom line is that we would be using stamps anyway, so we might as well purchase ones that may result in our saving money in the future...

MoneyLA

coinpictures, you wrote: "That $5,000 may last us 5 years. "

Gosh, do you really want to tie up $5K in stamps?

First, consider the potential for loss. After all, those are paper stamps just sitting in a drawer or safe. Not very secure.

Second, consider the lost interest on $5k sitting in a drawer or safe in stamps --- and not in an interest bearing account paying just 5%.

Let's say you have 5,000 tucked away the first year, thats $250 of interest lost.

The second year you have 4,000 remaining, that's $200 of interest lost.

the third year you have 3,000 remaining, thats another $150 of interest lost.

the fourth year you have 2,000 remaining, thats another $100 of lost interest.

the fifty year you have 1,000 and potentially another $50 of interest lost.

Without compounding, your lost potential interest comes to about $750.

Now, how much are you going to save in postage by buying the forever stamps? A five thousand dollar purchase of 39-cent stamps would get you about 13,000 first class stamps. Let's say postage rates increase by 5-cents immediately after you buy your 13,000 stamps -- you will save $650. And that's less than the $750 of bank interest.

But will postage rates increase by 5-cents the day after you buy your 5,000 dollars of forever stamps? I doubt it.

So, I suggest you leave your money in the bank, don't risk losing money with stamps that can be lost, and pay for the extra postage like the rest of us.

Best wishes.