NEW YORK — You probably got them from your grandparents on birthdays.
They carry George Washington's picture, and a patriotic pitch from Uncle Sam.
But does a gift to a kid make much sense as an investment for an adult?
Many investment advisers say no. US savings bonds often get low marks for their low yield and complexity.
Nonetheless, the bonds remain a staple for millions of Americans. They are safe, cheap, and free from state and local taxes.
And the US Treasury has important changes in the works: inflation protection and the ability to buy them via computer.
"Where else can a small saver get a tax-sheltered product for as little as $25" that is fully guaranteed by the US government and has no maintenance charge? asks Peter Hollenbach, a Treasury spokesman.
By comparison, you must invest $1,000 or more to buy a long-term Treasury bond.
Savings bonds are bought for half the face value, such as $25 for a $50 bond. The longer you wait to redeem them, the closer they get to the face value.
"There is a strong case for buying savings bonds at the conservative end of the investment spectrum," says Daniel Pederson, a financial consultant specializing in savings bonds.
Uncle Sam is now making it easier, with:
* Inflation-indexed savings bonds. - Patterned after the new inflation-indexed Treasury securities, these bonds could arrive by January 1998. Your bond's principal would rise with inflation. Interest would come on top of that protected face value. Analysts say the Treasury may also allow the bonds to be used for individual retirement accounts. That is not possible today.
* The "Savings Bond Wizard." This free computer program calculates your bond values. That's no easy task, since each bond has a shifting interest-rate mechanism. The program also lets you create a bond inventory. It's available by Internet at http://www.publicdebt.treas.gov.
* Direct computer purchases. Later this year, you will be able to buy savings bonds from your home computer and pay with a credit card. Now most people buy them at banks or through payroll-deduction plans.
Still, experts balk.
They need safekeeping, which means extra cost and inconvenience.
And you have to remember to redeem them, no reminder from Uncle Sam.
Interest rates beat most bank rates but barely top those of money-market mutual funds.
Moreover, the rates themselves are frustratingly complex. The rate used to be guaranteed, but Treasury dropped that feature two years ago. Now it uses market-based rates, calculated as a percentage of Treasury rates.
The rate now changes twice a year, on May 1 and November 1. The current Series EE bond pays 4.56 percent for the first five years - 85 percent of the average of six-month Treasury yields.
The long-term rate, after five years until maturity at 17 years, bumps up to 5.53 percent - 85 percent of the average of five-year Treasury securities. (Call 800-US-BONDS to update yield information.)
The low rates and complexity help explain why Americans now buy only about $6 billion of the bonds a year, down from $18 billion in 1992. Still, they remain the world's most popular government-sponsored savings program. More than 55 million savers own about $190 billion worth.
Interest earnings can be tax-exempt if the saver meets income limits and the bonds are used for a child's college costs.
Other bondholders save money by redeeming during retirement, in a lower tax bracket than when they were working.
Mr. Pederson offers a book on savings bonds ($24.95: 800-927-1901). His firm also tracks interest earnings on up to 10 bonds for $12. Another service, (800-717-2663), charges $12 for up to 20 bonds.