Stamp Out Inflation

Abstract

Protection against inflation is a key concern for investors, whether they are pension plans trying to meet future liabilities or individuals hoping to save for retirement. With the release of the Forever stamp by the U.S. Post Office, there is another investment to provide inflation protection, whereby the purchase of this stamp locks in the price of first-class postage “forever.” This article explores the trade-offs for philatelic consumers of purchasing Forever stamps to hedge their exposure to postage inflation versus investing in other inflation hedges, in particular Treasury Inflation Protected Bonds or I Savings Bonds. The authors examine the effects of both future realized inflation and taxes on this decision, and note other considerations as well.