Investments: we’ve got it licked

Stamps Photo: ITV News

One side effect of announcing a price rise in stamps over a month before it comes into effect is that it may trigger a wave of arbitrage.

In other words buy a stamp marked “1st” today for 46p and from April 30th it will be worth 60p - a rise in value of almost a third.

In fact, you could hang on to stamps in anticipation of further price rises as Royal Mail prepares for privatisation (the stamps are timeless and don’t expire).

I’d love to say I’m the first to think of this but I spotted some research done a little while back which has actually looked at how your investment would do over the long term.

Price of the first class stamp since 1989 compared with cash in a bank account Credit: Statistics UK

It is over the short term that benefits are really clear. The graph below covers six years (and interest rates at the moment are at rock bottom so the difference is even more pronounced):

Price of the first class stamp compared with cash in a bank account over six years Credit: Statistics UK

After the price change on April 30th, you would be sitting on a profit of almost a third. As long as you could sell them, of course. You might have realised a paper profit but there are holes in the plan (and not just the perforations) as Royal Mail won’t buy them back.

So is there a secondary market? A quick scan on eBay shows this bulk-sale auction for 174 stamps, worth £80.04 and bidding at the time of writing for £77.52 with two days to go – still a handsome profit if you bought before the price rise and sold immediately after.

Although you’d still have to get the stamps to the winner of the auction somehow. And what with the price of stamps nowadays, that could prove very expensive.

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