If you’re approaching retirement without much of a nest egg, it can be tempting to put money in some high-risk, high-reward investments. These investments can offer large returns, far outpacing the rates you’ll earn on more traditional stocks and bonds.

However, regulators warn that there is no such thing as an easy way to make money. And making these types of investments can be tricky. You’ll run into varying rules for what investments you can make within traditional retirement funds — and different penalties for taking money out of them to pursue investment opportunities on your own.

Rules for Different Retirement Accounts

There is no official list of approved or prohibited retirement investments, according to the IRS. However, once you get outside of stocks and bonds, you start entering into the realm of what are known as “alternative investments.”

Alternative investments include real estate (including investing in REITs, or real estate investment trusts), startup companies, hedge funds and pooled investments in business ventures.

Even if you actively manage your savings, your current retirement account manager will have rules regarding what type of alternative investments you can choose. These companies are also, in many cases, bound by federal law to make choices that a “prudent investor” would make for their own retirement.

Below are a few common types of retirement accounts and the rules you’ll need to follow to invest outside the box.

401(k)

A 401(k) is a common type of retirement account that allows people to automatically contribute part of their paycheck to a company-sponsored plan. Employers may also contribute to the employee’s account. The money you save is only taxable once you take it out.

The plan manager will have rules regarding what type of investments you can make. Vanguard, for example, does not allow retirement savers to access its alternative investment fund.

If you want to use money saved in your 401(k) for an investment opportunity, you’ll need to adhere to IRS rules for distributions. Generally, you’ll face a penalty if you withdraw money from your 401(k) before age 59 ½, unless you have a qualified disability. If you do decide to take money out early, you’ll pay a 10% penalty on top of normal income tax on the distribution.

However, many 401(k) plans allow you to borrow against your balance. IRS rules allow you to borrow up to 50% of your vested savings without penalty, provided that you pay the loan back within five years and make at least quarterly payments.

IRAs

IRAs are typically known as “Individual Retirement Accounts” and is a common type of personal retirement savings outside of a corporate-sponsored plan. Traditional IRAs allow you to deduct the amount you contribute from your taxes, effectively deferring the tax until you withdraw your money.

Federal rules limit the types of alternative investments you can make through an IRA. For example, you cannot invest in collectibles — like art, antiques, gems, coins or alcoholic beverages — and your ability to invest in most precious metals is limited.

You can withdraw money from an IRA without penalty after age 59 ½, though the distribution will be taxed as income. Before that age, you’ll need to pay a 10% additional penalty in most cases.

Roth IRA

With a Roth IRA, you pay taxes on the money you put into it — but can then withdraw money during retirement tax-free.

Most of the same rules apply to Roth IRAs as to traditional IRAs. However, you are able to withdraw the money you put into a Roth IRA at any time without a penalty. You may pay a penalty on the earnings from your Roth IRA if you take the money out before age 59 ½.

6 Considerations Before Dipping Into Your Retirement Savings

Even if you’re in the clear legally, you must think carefully before using your retirement savings on alternative investments or other high-risk, high-reward investment opportunities.

Ask yourself these six questions before you invest:

1. Do you understand the investment?

Regardless of where you put your money, it’s important that you understand the investments you make with your retirement savings. Many alternative investments can be complex, so making sure you are well-versed in its structure is imperative.

2. What safeguards do I have?

Before pursuing an investment opportunity, you should understand whether you are turning over your money to an investment company regulated by the Securities and Exchange Commission (SEC).

Companies that deal with stocks and mutual funds generally fall under the regulator’s umbrella. However, there are many investment pools or private investment companies that are not regulated by the SEC and can potentially expose you to greater risk.

3. How long until you need the money?

The longer your investment horizon, the more risk you can generally take. If your retirement is looming, you may be better served in a safer, less volatile investment.

4. Are your investments diversified?

It’s risky to have all of your money tied up in one type of investment. Before considering an investment opportunity, make sure that your risk is spread across different types of investments.

5. What is the investment cost?

Similar to how you should shop around for a mortgage (which in some cities can save you as much as $70,000), you should also shop around for an investment manager with your retirement savings.

Most retirement savings accounts incur fees, and alternative investment fees could be higher than the ones you find in more traditional investments.

6. How much can you afford to lose?

If you stray outside of traditional investments, you need to be comfortable with the fact that you may lose all of the money you put in. The Minnesota Attorney General’s Office recommends not turning over more money than you can afford to lose.

If you’re counting on the money for your retirement, you may be better off with a more safe and reliable investment.

Joe Resendiz is a Research Analyst at ValuePenguin, where he focuses on personal finance and credit research to assist consumers. Previously, Joe specialized on public sector and infrastructure financing at Goldman Sachs. He graduated from the University of Texas at Austin with a BBA in Finance.