On May 12th, 2008 the United States Postal Office will be raising the following postal rates:

• First class mail one ounce or less: Up one cent to 42 cents
• Post card: Up one cent to 27 cents
• Large envelope, 2 ounces: Up 3 cents to $1.
• Certified mail: Up 5 cents to $2.70
• First-class international letter to Canada or Mexico: Up 3 cents to 72 cents
• First-class international letter to other countries: Up 4 cents to 94 cents

Going forward, the postal service will also adjust the rates every May according to inflation rates. They only have to give a 45 day notice as long as the changes are within the rate of inflation for the previous 12 months. As a result, millions of people are stocking up on the Forever stamp, which is currently priced at 41 cents. The Forever stamp's cost also rises to 42 cents on May 12th, but Forever stamps purchased at the 41 cent rate can still be used as a first class one ounce stamp without adding postage.

So should you grab as many of these stamps as you can? Well, I think it really depends on how much postage you spend in a single year. If you are only an occasional mail customer like me then purchasing Forever stamps will only save you a few cents a year. However, as Julie Rains points out, you can use the Forever stamp as a 42 cent stamp on mailings costing over 42 cents so stacking the stamps on more expensive mailings could save you a little more. For example, international rates are going up 4 cents to 94 cents so it is possible to use 2 Forever stamps and a 10 cent stamp to cover that cost. The problem with stacking Forever stamps is that it takes a lot of time to save a few cents.

I read a story sometime ago about a man who purchased $8000 worth of Forever stamps as an investment, and I thought that was rather silly because it is probably better to just put that money in a mutual fund or even money market. For the past 36 years postal rate hikes have been lower than the inflation rate. Since the whole point of investing is to beat inflation, betting on Forever stamps is not a very good strategy. Going forward, since President Bush signed the Postal Accountability and Enhancement Act in 2006, it is guaranteed that postal rates will not go above an inflation-based ceiling.

Basically, I think that buying too many Forever stamps is probably not a good idea. They are easily destroyed or lost and you cannot deposit them like money. You could easily estimate how many letters you send a year, and multiply that number by five and ten. That would be the max number of Forever stamps I would buy because you would be set for five to ten years. I am sure most of us probably do not need more than a few hundred stamps. Now if the government introduces a Forever gas stamp that guarantees a gallon of gas for today's price, then I would definitely stock up $8000 of that stamp.