Summer is just about over, but we expect most Motley Fool Answers listeners didn't "sell in May and go away" -- you've been keeping up with matters of finance and investing all along...right?

However, if you happened to take a break from thinking about your money during beach season, you might have missed a few of Alison Southwick and Robert Brokamp's monthly mailbag shows. In which case, you wouldn't have noticed that Ross Anderson -- certified financial planner from Motley Fool Wealth Management, a sister company of The Motley Fool, and a regular on the mailbag podcasts this spring -- took a break from his guest hosting duties as well, so that other Fools could get their time in the sun. Now, he's back to help the podcasting duo address another batch of listener queries.

In this segment, a listener wants some insight on one of Bro's more common refrains: "Money you're going to need in the next five years should not be in the stock market." Sure, says the fan, but what if waiting to pull those funds out of stocks gives him the ability to significantly reduce his capital gains tax bill? The Fools weigh the risks and benefits.

A full transcript follows the video.

This video was recorded on Aug. 28, 2018.

Alison Southwick: The next question comes from Rod. "I've heard Bro say many times that money you're going to need in the next five years should not be in the stock market. Read it in your best lecturing-dad voice." Oh, I'm sorry. "Money you're going to need in the next five years should NOT be in the stock market!"

Robert Brokamp: Is that an impersonation of me or your dad?

Southwick: It's kind of an impersonation of an oldie, tiny man on Wall Street shaking his finger at us all, but I don't know. Was that good?

Brokamp: That was good. Yeah, I liked it.

Southwick: "I'm guessing that's because he believes the risk of a market downturn outweighs the reward of a surging market. Well, Bro, I currently have $600,000 in a brokerage account that I plan to use in four-and-a-half years to buy a condo after I retire. If I take the money out of the market now, I will owe the state 5% in capital gains taxes. However, if I wait until after I retire, I will owe 0% in state taxes because I'll be moving to Nevada, which doesn't tax capital gains. So, in my case do the rewards of leaving my money in the market outweigh the risks since I'll automatically gain 5%?"

Brokamp: Well, let's have Ross answer that first to see what he thinks.

Ross Anderson: Let's first start on this question by talking about why we have that five-year rule, or why we talk about wanting to wait five years or not have any money at risk that you're going to need in the next five years. That is because inside five years you have a pretty high level of uncertainty in terms of what your outcome is going to be in the stock market.

If you're willing to invest for 20 years long [and we're just talking about the S&P 500 US large-cap stock market returns], over 20 years your range of outcomes is between 7% annually in gains and 17% annually in gains. There's never been a 20-year period in our history that stocks have lost money over that period.

If you get to 10 years, that range actually expands, and so you had as much as 19% annually over a [10-year] period, or a loss of 1% annually. So even over a 10-year period there has historically been a small chance that you could lose money, but the odds are very much in your favor that you won't.

By the time you get to five [years], it could be as high as 28% or as low as [3%], and so as you get to one [year], and this is the really important one, over a one-year period invested in stocks you could make as much as 47% or lose as much as [39%]. That's what we've historically seen.

So what you're doing is you're basically betting that [in order to save] 5% in taxes the market won't go through one of those losing periods between now and then. I don't know that I'm comfortable with that. 5% is a healthy amount that you could save in taxes, but it's not a lot compared to what you could potentially lose if we actually saw a big correction or a downdraft in the stock market over that time period.

I wouldn't necessarily have you do that. I would start to at least take some of that risk off the table. It doesn't have to be all at once and it doesn't have to be immediate, but in four-and-a-half years a lot of things could happen in the stock market.

And the question I would ask yourself is if something happens in that time frame are you flexible with when you buy a condo? If waiting two years is no big deal then maybe the answer changes, because that could be a moving target for your time horizon. But if it's got to be four-and-a-half years on the dot and you're moving [it's going to happen], I would start taking some of that risk down because I don't think 5% is worth it.

Brokamp: There's always this question, too. If you have enough for your goal, why take more risk? If his overall finances are in good shape -- if he has a good-sized portfolio and maybe he'll get a pension or something like that, and he has enough to buy the condo already -- why take the risk?

I should say, by the way, that the five-year rule I always use is pretty conservative. You look at other Motley Fool analysts, here, who will say, "I'm fine with investing in the stock market if I just have a three-year time frame." In the end, I think it comes down to risk tolerance and, as Ross said, what are the consequences if the market does tank and does not recover by the time that four-and-a-half years are gone. If you're going to be fine and you don't mind the risk, OK. If that would be devastating to you and you have the money saved, why not just reduce your risk?

Anderson: If we're looking at the most recent big crash -- if you were right now standing on the peak of 2007 US stocks and looking over the edge with perfect 20/20 vision -- it took until 2012 to get back to even. That was a full five-year window and that's an abnormal period. That's not what we see every time and that shouldn't be happening once a decade. But it has happened. It's happened in pretty recent history. Try to keep that in the front of your mind if you're making that sort of a choice.

Ross Anderson is an employee of Motley Fool Wealth Management, a separate, sister company of The Motley Fool, LLC. The information provided is intended to be educational only, and should not be construed as individualized advice. For individualized advice, please consult a financial professional. The Motley Fool has a disclosure policy.