Are Postage Stamps Better than High Yield Money Market Accounts?

You can lock in today's prices for postage for eternity. Is it a solid investment, or another tulip-bulb craze?

Everyone wants to be financially comfortable when retirement time comes around. Some of us sock our savings in the mattress. Others depend on interest-bearing bank accounts. Now, you can buy first-class postage stamps that will work in 10 or 50 years, all at today's prices. Could this be the next great investment?

It sounds tempting, but it only is worthwhile if it can beat solid money market account rates over the long term.

Steady stamps?

Postage rate increases have been plentiful in recent years. Since 2000, the cost of a stamp has risen from 33 cents to 39 cents, in three separate jumps. That's a 24.2 percent increase in seven years.

That sounds great, but it's just 3.3 percent on a yearly basis-barely above the 3 percent annual inflation rate. In the last 88 years, postage rates have increased nearly twenty-fold, but that averages out to only 3.5 percent a year.

Consider that a stamp cost 3 cents between 1932 and 1958, and this "investment" starts to look a bit shaky. You'll also have to discount about 15 percent as you sell the stamps in bulk. The collector value will be marginal, as the government is sure to print up untold millions of these babies.

Great rates

These days, the average money market account gives you a safe and secure 3.6 percent annual interest rate. Look a bit further, and it's easy to find money market rates above 5 percent. These accounts have many advantages: They are FDIC-insured, offered by large banks, and often come without minimum balance requirements or bank fees. And if you do some investigating, you can find some high yield money market accounts online that will give you even higher money market rates.

If the stock market's 12 percent long-term returns aren't worth the risk to you, you're still better off turning to a traditional bank account rather than speculating in stamps. Your mattress is great for sleeping on, but not for holding your life savings. Find a great savings account today with great money market rates, and beat inflation without even trying.