I've never been an enthusiastic supporter of U.S. Savings Bonds as an investment. Even with the recent increases, Series EE bonds will pay only 10 percent if held to maturity, or less if redeemed early.

But there are three advantages to savings bonds that I should point out. First, all interest on savings bonds, though subject to federal income tax, is exempt from state or local income tax liability.

Next: Payment of the federal income tax on the interest can be deferred until the bonds are redeemed. That makes it possible to earn 10 percent without tax consequences while you're working, then pay the tax when you draw on the bonds after retirement, a time when most people are in a substantially lower tax bracket.

Finally, the automatic withholding technique of the payroll savings plan is made to order for people who tend to spend whatever money is available and have trouble disciplining themselves to pull out ready cash for savings.

Ten percent in tax-deferred earnings is not as good a yield as, say, 12 percent tax-free, and--depending on your tax bracket--may not be as good as 16 percent in taxable interest.

But 10 percent of something is a heck of a lot better than 12 percent or 16 percent of nothing.

I still believe that, in theory, an investor can do better elsewhere. But if you live in a state with a high income tax, or if the tax deferral feature appeals to you, or if you need the enforced-savings feature of the automatic payroll plan, then you might do well to take another look at super-safe Series EE savings bonds.

Question: In a recent column you stated, "Some utilities . . . offer a partially tax-free return of capital as a part of their dividends . . ." What happens when the capital has been exhausted in dividends?

Answer: If a return of capital (when added to such distributions received in the past) exceeds your cost basis, the excess over your cost is treated as a capital gain and reported on Schedule D.

It is a short-term gain if you have held the stock one year or less, long-term if the holding period is more than a year.

For the purpose of determining gain or loss on a later sale, your original cost basis must be reduced by the total of all capital distributions received, but never to less than zero.

Q: The only thing I hear about the failure of savings and loan organizations is that my savings are protected up to $100,000. Swell, but what about all the money I've put into my mortgage? Do I lose it, or is there any warning before failure? Could I pay off my mortgage after they fail and still save my house?

A: Your previous payments on a mortgage held by an S&L would not be jeopardized by its failure; your liability for future payments would continue.

In most cases, troubled S&Ls have been taken over by healthy associations, with, at the worst, only a few days' delay in access to funds on deposit. As you pointed out, deposits up to $100,000 are protected by the Federal Savings and Loan Insurance Corp.

In any case, past (and future) payments on the mortgage and the safety of your home would not be affected by an S&L failure.

Q: What is the IRS parameter for deducting travel expenses for an investor attending investment or financial conferences?

A: The experts at IRS tell me they have not issued any rulings on this specific question, but there have been court cases in which the decisions have gone both ways.

My feeling is that you should follow the general rules for deducting education and training expenses.

That is, if you are simply gathering information in anticipation of doing some investing in the future, in effect you are training for a new endeavor and the costs would not be deductible.

But if you are already involved, interested in improving your knowledge, and the seminar topics are reasonably related to specific investments already made or contemplated, then the costs should be claimed as investment expenses on Schedule A.