Personal Finance

Saving for retirement? Be wary of these investments

Mathew Schwartz, special to
Retire Well: Talking Taxes
Tapping your 401(k) ... penalty free
Tapping your 401(k) ... penalty free
Gauging your risk tolerance
Gauging your risk tolerance

For the average American retirement saver, the world of investing can feel a lot like that scene near the end of "Indiana Jones and the Last Crusade." The Holy Grail–a wise investment that will perform well over time–is right in front of you. But it's hidden among a host of glittering frauds–investments that could kill your returns if you pick them.

No one wants to reach retirement age, only to be faced with an anemic nest egg and hear echoing in their minds the words of the Crusader: "He chose … poorly."

While it's impossible for anyone to accurately predict the future and point you toward the guaranteed winners, it is possible to spot some likely losers.

Here are a few investments advisors say retirement savers may want to avoid.

Not everyone has either the means or the desire to become a landlord. For those who don't, a real estate investment trust is an easy entry into that world.

REITs are required by law to distribute 90 percent of their income annually to shareholders in the form of dividends. For a person looking for an income stream in retirement, that's a great selling point. Investing in large, publicly traded REITs like Acadia Realty Trust or Simon Property Group is as simple as buying stock.

Non-traded REITs

Mark Edward Atkinson / Tracey Lee | Getty Images

But nontraded REITs are a house of a different color–one so shaky that FINRA has issued a warning about them.

There are some advantages. Both exchange-traded and nontraded REITs offer a hedge against inflation, since the underlying properties can raise rental fees if interest rates begin to rise. And there's that 90 percent distribution requirement.

But with nontraded REITs, you're locked into the investment for a period that can range from five to 10 years. That's what "nontraded" means: there's no exchange to sell them on. So it's hard to unload your shares early if you need the money. And if your nontraded REIT does have a program under which it's willing to repurchase shares, it will be at a discount to the price you paid.

Read MoreWeighing the risks of non-traded REITs

Another concern: You frequently don't know what you're buying. Nontraded REITs are often set up as "blind pool" investments. The managers pitching you on the investment may tell you what kind of real estate they intend to buy and can provide you with projections about how they think those deals might work out. But they do not tell you what specific real properties will be acquired.

Nontraded REITs can also have outrageous fees: "front-end fees that can be as much as 15 percent of the per share price," notes FINRA.

Bottom line: If you want to own a REIT, publicly traded ones offer lower costs and more liquidity.

Managed-futures funds

How to reduce retirement needs
How to reduce retirement needs

People who can see retirement approaching on the horizon are often looking for ways to hedge their bets, such as investing in products that are likely to rise when stocks fall. Managed-futures funds, which trade in futures and derivatives, meet that need. And these funds did especially well in 2008 and 2009.

But, as a Bloomberg report found in 2013, most of the monster profits don't trickle down to the investors who were taking all the risks. After examining a decade's worth of SEC data for 63 managed futures from 2003 to 2012, Bloomberg found that 89 percent of the funds' gains were consumed by fees, commissions and expenses.

Read MoreAs alternative investments go mainstream, investors scratch their heads

Yes, after they paid the managers of these funds, investors walked away with just 11 percent of the profits. And that was only the average: At 29 of the funds, fees turned what should have been gains for investors into outright losses.

Fees aren't the only issue. Managed-futures funds also carry a lot more risk than other funds.

On its website, alternative investment provider Altegris even warns that "the risk of loss in trading commodities can be substantial" and that in some cases, managed-commodity accounts "are subject to substantial charges for management and advisory fees."

Whole life insurance

To listen to those who sell whole life policies, you'd think they were a near-perfect investment: one that combines tax-free growth, flexibility, enforced savings and an insurance policy into a single shiny package.

And the selling points are valid–up to a point. You have a guaranteed premium, interest rate and death benefit. The policy holds a growing cash value, and you can borrow against your whole life balance without risking penaltiesunlike taking out a 401(k) loan. Your investment grows tax-free, with a guaranteed minimum annual dividend. And if the worst case does occur, your policy will pay out as promised.

But there are some disadvantages to whole life insurance versus term or universal life insurance.

Read MoreHow much life insurance do you need?

First, they're generally more expensive than term or universal coverage: The commissions and annual fees on these products can take a real bite out of your investment. Second, the returns you get on your money are often lower than you'd earn on a similar investment elsewhere. And there's not much flexibility to the policy should you decide you want more coverage or to increase or decrease your premium.

"In 30 years in this profession, I've yet to see anyone benefit by whole life's 'investment' side," said Neal Frankle, a certified financial planner in Westlake Village, California. "There may be some out there, but I've yet to meet them."

Meanwhile, because the premiums on a whole life policy can be so much higher than the same value of term life, people who buy whole instead of term may end of severely underinsured. "The salesperson tells them they have coverage and an investment, but in fact they have neither," Frankle said.

Read More4 groups who need life insurance most

Whole life can be a great product for very small demographic–primarily people who will use it as a way to reduce their estate taxes. But those apply only to people leaving millions of dollars to their heirs. (In 2015, the floor is $5,430,000, and it adjusts upward annually.) If your estate won't be quite that impressive, it's probably not for you.

Tax-deferred variable annuities

The closer you get to retirement, the more likely you are to be looking for safety and consistency from your investments. "Just put me into something that will give me a nice, steady return I can count on," you might tell your money manager. "I have the perfect product for you," he may reply. "An annuity."

An annuity is basically an insurance contract in which you pay a financial institution a specific amount of money—either in a lump sum or through a series of payments—and the company then invests your money and promises to pay you a regular income right away or in the future. Annuities can be attractive to investors because they offer the ability to build tax-deferred savings, can help protect the money that you've already saved, and generate a steady stream of income in retirement.

But not all annuities are the same.

Read MoreAnnuities for retirement: good or bad idea?

In a variable annuity, you put a lump sum of cash into the hands of an insurance company to invest through a tax-deferred account. But unlike a fixed annuity, a variable annuity has no guaranteed returns because your money is invested in one or more subaccounts composed of stocks, bonds and money market instruments (though there is typically a subaccount with a fixed rate of interest to guarantee a minimum rate of return).

Annuities in general have had a bad reputation among investors, in part because of their hefty fees, which can run as much as 3 percent a year or more. Financial advisors suggest that before you buy an annuity, you understand the expenses, management fees and surrender charges that you'll pay if you try to get out of the contract. There also may be fees for additional features like a living benefit income rider—something some investors will purchase along with variable annuities to guarantee a certain amount of income.

Read More 4 things you need to know about variable annuities

In a research paper, the Securities Litigation and Consulting Group, a financial economics consulting firm based outside of Washington, D.C., also pointed out another downside. "In most situations," the authors wrote, "investors being sold annuities will pay more taxes and have less wealth in retirement as a result of the tax treatment of investments within tax-deferred annuities."

CORRECTION: An earlier version misspelled Neal Frankle's first name.