🎙 Passive Cash Flow Podcast EP.186 | Could Washington’s Spending Ignite a Financial Meltdown?
Can the US government keep spending like we’re in a recession? Earl Yaokasin and host Aaron Fragnito dive into the shocking truth about Washington’s “rampant spending” and the financial end game no one is talking about.
What if your financial advisor invested in the exact same portfolio as you—because they believed in it that much? Today’s guest does exactly that. Earl Yaokasin [Yeow-kah-sin], CFA, is a fiduciary investment manager with more than 20 years of experience and a value investing approach inspired by Warren Buffett. He runs WealthArch Investment Services in California, and he helps high-networth individuals grow wealth with long-term strategy and zero hype. If you’re ready for a grounded, experienced voice in investing, this conversation is for you.
Learn more at: https://mywealtharch.com/pcf/
🧠 Topics Covered:
00:00 – Introduction
03:16 – Market Timing, Bubble Concerns, & Long-Term Views
07:26 – Panic Selling, Market Drops, and Cash Strategy
11:20 – Alternatives and the 60/40 Bond Structure
15:36 – Emergency Funds, Treasury Bills, and Interest Rate Outlook
20:13 – Investing for Lower Rates and Stock Selection
23:29 – Impact of Government Spending and the Long-Term Outlook
28:46 – Conclusion, Optimism, and Contact Information
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⚠️ Disclaimer:
This is not a solicitation for funds, tax advice, or legal advice. This is not intended to be, and must not be construed to be in any form or manner a solicitation of investment funds or a securities offering. Peoples Capital Group LLC is NOT a United States Securities Dealer or Broker nor U. S. Investment Adviser is a Consultant/service provider and makes no warranties or representations as to the listener or viewer. All due diligence is the responsibility of the investor.
Transcript:
00:00:00:00 – 00:00:05:11
Aaron Fragnito
So what? What do you see? Is the end game with this just rampant spending out of Washington?
00:00:05:17 – 00:00:19:08
Earl Yaokasin
Kind of like the story of Cinderella spending works the same way. It’s unsustainable. At some point, the clock strikes midnight and everyone has to face the music.
00:00:19:10 – 00:00:33:04
Aaron Fragnito
All right, ladies and gentlemen, welcome back to the Passive Cash Flow podcast. I’m your host, Aaron Frag. Neato. And we’ve interesting guest today on the Passive Cash Flow Cash Flow podcast. We have Earl yell. Carson, how are we doing today? Earl.
00:00:33:06 – 00:00:35:06
Earl Yaokasin
I’m doing great. How are you, Aaron?
00:00:35:08 – 00:00:59:10
Aaron Fragnito
Oh, pretty well. Pretty well, I wanted to have you on the show here as you are a, certified financial advisor. You are an Ria registered investment advisor and, a man of many talents, helping other people build their wealth in a different asset class than, real estate here, which is what I focus on. So we like to mix it up a little bit here and get some different types of, professional investors on the show here.
00:00:59:12 – 00:01:17:17
Aaron Fragnito
And, but. Yeah. So what? I just have you on here and, I give some tips, by the way, to our listeners and our viewers, if you’re enjoying this content, be sure to like and subscribe and share with a friend if you’re gaining value from our podcast. We have over 190 episodes here. We come out with a new episode every two weeks here on the Passive Cash Flow podcast.
00:01:17:17 – 00:01:39:06
Aaron Fragnito
We’re on YouTube and all the major podcast platforms. You can check us out there. You little more People’s Capital group.com as well. But let’s jump right into it here, my friend. What I found interesting about your, bio there is that you also invest alongside your clients. So that’s a crazy idea. Most financial advisors just sell some product or commission.
00:01:39:06 – 00:01:52:15
Aaron Fragnito
You know, they make, whatever. Maybe they don’t make commission. I don’t know, maybe they invest in this, that some widget, some new technology, but they wouldn’t there. But their own money at risk from. I understand you also invest alongside your clients. Is that the case?
00:01:52:17 – 00:02:18:19
Earl Yaokasin
Yeah, that’s the case. Eric. Aaron and one thing that’s super unique about me and my firm is that 100% of my net worth outside of my emergency fund and opportunity fund is actually invested the same way as my clients. And there was actually a study done by Morningstar where half of all mutual fund managers don’t even invest a single dollar in in their own fund, which is absolutely bonkers.
00:02:18:21 – 00:02:39:15
Earl Yaokasin
And I think it’s extremely important for an advisor to invest alongside their clients, because then they have skin in the game. That way, if they are recommending or investing this investment for their client, they’ve done a lot of research on it because if they lose money, their clients lose money too. And if they make money, their clients make money too.
00:02:39:15 – 00:02:56:02
Earl Yaokasin
So they have every incentive as much as possible to make sure that they’re picking the best investments for their clients. And of course, if the commissions are high for a specific product, then they they’re not going to want to recommend that product because they have to pay the commission themselves.
00:02:56:04 – 00:03:16:15
Aaron Fragnito
Interesting. Now, you know, I talk to a lot of investors every day in my real estate syndication group here. And a lot of people are a little weary of the market. You know, they went up and down with the tariffs over the last, first like two quarters here of the year. People are saying the market had a good run and there’s no way it’s going to keep growing this year.
00:03:16:15 – 00:03:24:05
Aaron Fragnito
And it’s a good time to sell, sell, sell. What would you say is a time to be selling or buying, or is that the wrong way to look at the market?
00:03:24:07 – 00:03:46:06
Earl Yaokasin
Yeah. I’ll give you two perspectives on different sides of the coin. One is that there is no way that anyone can predict what the market will do in the short term. We do know, however, that in both real estate and stocks that over the long term investment properties and and businesses will go up in value. Generally speaking, of course.
00:03:46:08 – 00:04:16:10
Earl Yaokasin
And on the flip side, however, you can also say there’s this famous saying by Warren Buffett where if everyone is fearful, be greedy. But when everyone’s greedy, be fearful. And what I can tell you is that over the last 15 years, actually 17 years now, the market has gone on a, a very strong run with a lot less volatility than it has pre 2008.
00:04:16:12 – 00:04:49:11
Earl Yaokasin
So I do think that it is my opinion that I think the markets are very richly priced. I also think that despite stocks being super expensive that there could be some events that could push it higher. The first event would be corporate tax rates getting cut from 21% to 15%. The other thing is that Jerome Powell term is ending May next year.
00:04:49:11 – 00:05:14:04
Earl Yaokasin
Whether he gets replaced sooner than that, we don’t know. But if a new fed chairperson takes the helm and decides to lower interest rates by 2% or 3%, you know, broadly speaking, then that would be quite a positive for stocks making things even more expensive. And that’s why in the short term, we can’t really say when the market would turn.
00:05:14:06 – 00:05:47:08
Earl Yaokasin
But also one thing that we’ve seen through history is that whether it’s tulip bulbs in the 1800s, whether it’s Latin American currencies, whether it’s Japanese stocks, whether it’s real estate in the US, like in 2008, all bubbles eventually burst. And I do think that if the market does go higher in the short term, which, like I mentioned, it could easily do, I do think that the the fall would be much longer and sharper.
00:05:47:10 – 00:06:21:07
Earl Yaokasin
And one kind of hypothetical situation I like to make everyone think about is that imagine if you have $100,000 at the end of five years, if that $100,000 goes to 160,000, let’s say, and historically 40% drops 50%, 60% drops in the stock market is very common, and it happens every 7 to 10 years. And we haven’t had one really, a 40% drop since 2008.
00:06:21:09 – 00:06:51:13
Earl Yaokasin
So if you’re 100,000 goes to 160,000 and the stock market drops 40%, you’re going to be left with 96,000. So anybody who if that scenario happens and there are multiple infinite scenarios, but if that scenario happens, you would be better off just parking your money in a high yield savings account, getting 4%, if it’s if the market drops 50% and 60%, then even more so.
00:06:51:15 – 00:07:05:13
Earl Yaokasin
But of course, like I mentioned, we we don’t know when the market would turn. In the short run, it could go up much faster, but eventually nothing lasts forever.
00:07:05:15 – 00:07:26:10
Aaron Fragnito
Well, ideally, you you you don’t sell, right? Just because the market drops, you don’t want to sell. I mean, you want to buy low. Sell high. So that’s correct. You know, if, if you have the money invested in a mutual fund or something like that, and the market drops 40 or 60%, the last thing you want to do is sell.
00:07:26:11 – 00:07:47:17
Aaron Fragnito
Hopefully you’re not in a position where you have to liquidate for some reason or another. But, you know, that’s the mistake. A lot of people make. They panic sell, you know, and, they say, oh, I just want to get out. I can’t sleep at night, you know? And that’s that’s one of the reasons, actually. Real estate’s nice because it’s illiquid, you know, you can’t just panic sell when the market’s down or the project’s behind schedule or something.
00:07:47:17 – 00:08:13:15
Aaron Fragnito
You know, you got to stick with it and, wait for better days. And that tends to be a better investment strategy. And time tends to heal all, you know, cycles. Right? And then you find yourself at the top of another cycle. So, but, yeah, I mean, right now, we’ve had growth. You know, if you invested five years ago in the stock market, you would have grown almost 20% a year, depending on the mutual fund you’re in.
00:08:13:16 – 00:08:39:09
Aaron Fragnito
Yeah. Let’s say you have a mutual fund that rides the S&P 500 like a lot of mutual funds do. You would pretty much grow like 16 to 20% a year for the last five years. So you you’re 100,000 would be like 200,000. And then if you saw like a 30% drop, which I see that the pandemic, wasn’t that the last time the market really dipped, was that considered a recession or was so short lived that they don’t consider a recession?
00:08:39:11 – 00:08:59:23
Earl Yaokasin
Yeah, I think it’s still considered a recession. The stock market did drop 30%, during March of 2020. And like you said, the I call it actually the cardinal sin. So the cardinal sin of investing is actually selling when the market is panicking. So you definitely want to be doing the opposite. And that’s what I did during 2020 as well as 2022.
00:08:59:23 – 00:09:36:22
Earl Yaokasin
We picked up a lot of bargains during that time and those have grown significantly. More, some of them more than the 20% per year. And so that’s definitely what you want to be doing. And just given the current market situation, I’m not I’m not advocating an all in or an all out approach. I am just recommending something like, if a person’s allocation normal allocation to stocks is 60%, maybe they should, maybe they should be just 50% so that they have additional gunpowder to fire when eventually the stock market will drop.
00:09:36:22 – 00:09:39:02
Earl Yaokasin
And again, we don’t know when that would be.
00:09:39:04 – 00:09:40:16
Aaron Fragnito
Yeah. It’s hard to time the market.
00:09:40:18 – 00:09:41:17
Earl Yaokasin
No it’s hard.
00:09:41:17 – 00:10:00:06
Aaron Fragnito
Yeah. Yeah I mean right now we’re seeing in real estate is real estate’s on sale. I mean there’s more deals out there than our team even has time to underwrite and buy. You know, I have. I had another broker just call me right for this podcast. Another deal here. Deal. There I went saw one today, and it’s just crazy.
00:10:00:06 – 00:10:21:03
Aaron Fragnito
Real estate’s on sale. The prices have dropped 20% over the last 2 to 3 years. And commercial real estate now residential real estate, commercial real estate. Here in Jersey, the price of rent is skyrocketed. It continues to grow 5 to 6% a year. We we are coming off, a crazy time of growth from 2020 to 24.
00:10:21:03 – 00:10:40:24
Aaron Fragnito
And, you know, again, we continue to see healthy growth and rent. So the income on these properties is up. The price of the assets is down now. Sure. The cost of debt is more, but it’s it’s actually come down a little bit over the last year. So it’s starting to trickle down. And we do expect rates to come down in the future a little bit more.
00:10:40:24 – 00:10:57:14
Aaron Fragnito
Although we don’t underwrite with that assumption. But personally I think that will be the case. So I don’t know. Right now I feel like it’s a great time to be buying commercial real estate, especially apartment buildings, with the place where residential rent is, and a lot of people are kind of moving capital and taking some chips off the table, as they say.
00:10:57:14 – 00:11:20:21
Aaron Fragnito
And, the stock market and moving into alternatives. You know, what I notice to a lot of, family offices and ultra high net worth individuals invest primarily in alternatives, real estate, private, venture capital and so on. What are your views on investing outside of the stock market? Do you think, you know, people should have more uncertain alternatives in their portfolio?
00:11:20:21 – 00:11:22:15
Aaron Fragnito
What are your thoughts on that?
00:11:22:17 – 00:11:54:08
Earl Yaokasin
Yeah, I think that everyone should try to broaden their horizons and look at everything, and they should go after the investment asset class that gives them the best risk adjusted reward. And so if that’s real estate, go with a lot of real estate. If that’s some alternative mutual fund, then go with that. So I would say it depending on the market environment, depending on the prices, go with whatever offers you the best risk adjusted reward.
00:11:54:14 – 00:11:58:03
Earl Yaokasin
No matter what asset class it is.
00:11:58:05 – 00:12:18:01
Aaron Fragnito
Yeah yeah I agree. Yeah. We see you know and then what about the, the old fashioned 6040 bond structure. They say it’s debt right. Is that is that old news. Is, is that work anymore. 60% in equities 40% in bonds. You know you have to think about it. That’s just how you kept your asset portfolio for years.
00:12:18:01 – 00:12:22:13
Aaron Fragnito
That’s a, is that debt or is that still a smart way to invest?
00:12:22:15 – 00:12:45:21
Earl Yaokasin
I don’t think it’s a smart way to invest going forward. And the reason for this, and actually back in 2019, I was telling my clients that for all of their if you have any bond funds in your 401 K, sell all of it and put it in a in a money market fund. And the reason for that is that in a rising, rising rate environment, bond funds are going to get hit.
00:12:45:21 – 00:13:13:07
Earl Yaokasin
And now bond funds are actually very different than individual bonds. Individual bonds, as long as you hold them to maturity, there is no interest rate risk. But with bond funds, because there are so many bonds in one fund, if interest rates go up, the price of the fund actually goes down. So when 2020 hit and and I saw the seeds of inflation, I continued to tell people you might get an extra 1 or 1.5% investing in the in these bond funds.
00:13:13:07 – 00:13:34:13
Earl Yaokasin
But if interest rates go up, you’re going to get hit. And in 2022, we actually saw interest rates move up and the average bond fund was actually down 20%. So for those people who was trying, we’re trying to get just 1% extra for it, like 2 or 3 years. They lost 17% more on average. And that’s not a good place to be in.
00:13:34:17 – 00:14:00:04
Earl Yaokasin
So I would say that the traditional 40% bond allocation, it would make better sense if it were individual bonds. But most people and advisors, they just invest their clients in bond funds because it’s easier. And I think that if people were a little bit more educated, it’s not that difficult to trade individual bonds. I help people do this all the time.
00:14:00:06 – 00:14:28:00
Earl Yaokasin
And, as for the 60% stocks, I think that I would say that during the middle of the cycle, it totally makes sense for the average person with an average risk tolerance to have 60% in stocks. But as I mentioned, on the top of the call, you have to, reallocate that depending on market conditions. If market conditions are expensive, you want to have less than 60% stocks.
00:14:28:02 – 00:14:47:00
Earl Yaokasin
And if market conditions are cheap, like we both talked about, you want to you want to have more. And so 70% 80%. And if it if it were like 2008 scenario which I call like a real correction, then you want to have as close to as much as possible, as much risk as you can take.
00:14:47:02 – 00:15:10:00
Aaron Fragnito
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00:15:10:04 – 00:15:36:18
Aaron Fragnito
So find out if you qualify at People’s Capital group.com. Yeah. That’s interesting. Yeah. And you know, we we love money market accounts. You know, when we’re buying a property, we’re holding a few million dollars for, you know, a 30 to 60, 90 day period. And we work with different banks right now. We work PNC Bank, we get about a 3.8%, rate on that, you know, which, isn’t bad.
00:15:36:18 – 00:16:02:18
Aaron Fragnito
You know, it’s completely an absolutely savings account. And, yeah, the more money you put with these banks, the better they treat you. And, it is, it’s not fixed. Of course, you know. So it does. Yeah, it does fluctuate, but for the most part it goes through like 3.84. So, and, yeah, it’s not bad if you, if you have 3 million bucks sitting there for 90 days or waiting to close, you know, it’s a few thousand dollars extra that we disburse to the investors on a quarterly basis.
00:16:02:18 – 00:16:22:09
Aaron Fragnito
So the money’s not sitting there doing nothing. At least it’s making, you know, almost 4% or so. And, beating inflation or at least keeping up with inflation. So, that’s something we do, for our investors. Yeah. I, I actually like the, the money market strategy, you know, there’s nothing like a high interest savings account just to kind of keep your emergency funds.
00:16:22:09 – 00:16:49:21
Aaron Fragnito
And, you know, I remember, before I was well-educated investor, I, kept as part of my emergency funds in the Voyager app with, and in cryptocurrency. My confidence in cryptocurrency was so high at one point that I thought it was a good place to keep emergency funds. I mean, I had additional savings and everything like that, but I was like, oh, this like a bunch of cash I have here.
00:16:50:02 – 00:17:09:08
Aaron Fragnito
I’ll just grow it in crypto. I it was I would go, wow. And then Voyager filed bankruptcy or lost a little bit of it. So, anyway, it’s a crazy, you gotta remember emergency funds. I mean, you don’t invest it, you don’t invest it. That money is in, high interest savings accounts. You can access it anytime.
00:17:09:10 – 00:17:23:05
Aaron Fragnito
And I learned the lesson the hard way as a younger man. Absolutely. But, what do you, So you also advise people on the financial advisor level, what do you suggest to your, clients to keep as emergency funds?
00:17:23:07 – 00:17:46:17
Earl Yaokasin
Yes, definitely. So one is the money market that we just talked about, high yield savings account that are FDIC insured. And the other thing is, we try to ladder out Treasury bills and Treasury bonds. So we try to have, a Treasury bond maturing probably every, every month or so for, for their short term cash needs. And then every year thereafter after the first year.
00:17:46:21 – 00:17:54:22
Earl Yaokasin
So every so often there’s going to be some, some infusion of funds that they can access for their daily living expenses.
00:17:54:24 – 00:18:04:23
Aaron Fragnito
That’s interesting. Okay, I like that. Yeah. I mean, Treasury bonds are about as safe as you can get. They’re back. Yes. You know, so if they, if they go south, we kind of got bigger problems than,
00:18:05:00 – 00:18:22:05
Earl Yaokasin
Absolutely. Yeah. Yeah. If they go south, the money in the, the money in our banks could be worthless. And the, the treasuries actually pay a little over 4%. So they do pay a little bit more than the high yield savings accounts which, which are nice.
00:18:22:07 – 00:18:24:14
Aaron Fragnito
Okay. Okay. And you can lock in that rate. Right.
00:18:24:14 – 00:18:27:15
Earl Yaokasin
So that’s yeah you can lock in that rate for a specific time period. Yes.
00:18:27:17 – 00:18:39:05
Aaron Fragnito
Right. Right. That’s. Yeah. Yeah. So let’s talk for a second about interest rates here. You know you talk about Jerome Powell being let go here. When his his term when was that again.
00:18:39:07 – 00:18:40:08
Earl Yaokasin
It’s May next year.
00:18:40:11 – 00:19:03:23
Aaron Fragnito
May of next year. Okay. So, that’s gonna be interesting. You know, I think he’ll be replaced with someone probably more bullish on lowering rates is, yes, on the street. Right. So I think people are expecting rates to kind of, start to come down and halfway through next year. I mean, although the the fed chairman doesn’t really make that decision, there’s a board, but I suppose he could try to influence towards that.
00:19:03:23 – 00:19:05:09
Aaron Fragnito
Yes. Is that right? Yeah.
00:19:05:11 – 00:19:19:21
Earl Yaokasin
Yeah, yeah, yeah. The chairman usually dictates the flow of the meetings, the tone of the meetings. So definitely his stance will influence some of the opinions of the members of the fed.
00:19:19:23 – 00:19:42:08
Aaron Fragnito
And even when to chair a new fed chairman is named and like cut ready to come in. Will that’ll even like that. That new guy is going to be like kind of the voice of reason anyway. You know, Jerome will be like, you know, a lame duck at that point. When do they usually name a new fed chairman if they’re replacing the current one?
00:19:42:10 – 00:19:51:19
Earl Yaokasin
That’s a good question. I’m not 100% sure, but I believe that they will name it probably a month before, Jerome Powell terms ends.
00:19:51:21 – 00:20:13:15
Aaron Fragnito
All right, all right. So not too much time. Okay. Interesting. Yeah. And all right. So now let’s say, you know, fast forward a year from now, we have a new fed chairman. He’s bullish on dropping rates and rates beginning to drop. What what’s your advice at that point. What what is some good, you know, stock picks if rates are dropping at that point what’s a good structure strategy then.
00:20:13:17 – 00:20:37:24
Earl Yaokasin
Yeah I think that you want to actually get in before rates drop. So not when the rates are actually going down. So you want to anticipate before the market action happens. And if you do anticipate that if it does come to fruition that interest rates are going lower, what you want are more growth oriented stocks like technology stocks.
00:20:38:04 – 00:21:05:13
Earl Yaokasin
You also want to have sectors that benefit from lower interest rates, like, real estate, would be a good example as well. So I would say, and you would also want to invest in companies that are very strong but have a lot of debt, because if interest rates go down, then they can, refinance their debt at lower interest rate levels and that will boost their profits.
00:21:05:18 – 00:21:08:21
Earl Yaokasin
So those would be my primary recommendations.
00:21:08:23 – 00:21:29:06
Aaron Fragnito
Okay. Yeah. That’s interesting. And, what do you think about, you know, do you, do you prefer to do invest like the S&P 500 or are you also into like smaller? Companies that are kind of emerging companies, the small board you ever get into, small cap stocks or mid cap stocks. We’re usually I focus on.
00:21:29:08 – 00:21:59:11
Earl Yaokasin
Yeah. So I actually focus on individual stocks. And I normally have around 15 investments at a given time. But when markets are expensive I have less than ten. And when markets are super cheap I have more than almost 30. But again I average normally 15 and I do I go all over the place. So similar to my advice to your listeners earlier, where you want to go, where the best risk adjusted reward is, and that’s the same as me.
00:21:59:11 – 00:22:17:07
Earl Yaokasin
If the best risk adjusted reward propositions are being offered in smaller companies. So that’s where I go. If it’s in Japanese companies, that’s where I go. So I compare the stock universe to each other and go wherever the best risk adjusted reward possible is being offered.
00:22:17:09 – 00:22:37:06
Aaron Fragnito
Interesting. Interesting. All right. And, what are you seeing now with the recent tax bill that just passed? You know that I know for real estate, it’s been great. We have 100% bonus depreciation is back. So now when investors invest in our deals, they can get a 50% tax write off. And that same year they invest, which is incredible.
00:22:37:08 – 00:22:58:09
Aaron Fragnito
You know, a lot of our investors, I’ve been speaking to recently, they’re saying, wait, if I invest $100,000, I get a $50,000 tax write off, and that the year I invest. That’s amazing. You know, sign me up. So that’s been, popular, here recently. What what impact do you see the new tax bill having that was just passed on, the stock market, if it hasn’t already?
00:22:58:11 – 00:23:29:16
Earl Yaokasin
Yeah, I think it’s pretty much all priced in already. I would say that longer term, the last year, the federal budget was at a deficit of about 6.4% of GDP. This recent tax bill puts the deficit to about 7.5% of GDP, approximately. And that’s actually a positive for markets because the more spending is being done by Washington, the more, buoyant the economy will be.
00:23:29:16 – 00:23:57:06
Earl Yaokasin
So that’s actually a good thing for the short term. But for the long term, 7.5% of GDP spending is unsustainable. So the only two times in recent history and when I say recent history, the last 25 years, the only two times where we’ve spent more than we’re spending today. And I mean, the US government is during Covid in 2020 and also during the depths of the financial crisis.
00:23:57:06 – 00:24:24:06
Earl Yaokasin
So, in other words, the government is spending as if we’re in a recession. And that’s one of the reasons why the stock market has done as well as it it has it’s number one, the government spending a lot more than normal. Number two, there is a lot of money supply because of the fed. Number three is the low interest rates that we’ve seen from 2008 until 2021.
00:24:24:06 – 00:24:30:17
Earl Yaokasin
So because of those three main reasons, the ride upward has been extremely strong.
00:24:30:19 – 00:24:49:05
Aaron Fragnito
Okay. Wow. And then, what’s the plan here? You know, we just keep on spending like a drunk sailor here in the US, you know, I doge was supposed to, you know, kind of help us with our spending cuts, but I think their impact is, you know, as some of the impact, but still yet to be seen.
00:24:49:11 – 00:25:10:19
Aaron Fragnito
And also, I think they’re realizing how hard it is to cut spending in, in Washington, you know, super hard. Right? Every senator is like, well, we yeah, let’s cut spending. Just not in my state, you know, like, not in my backyard, you know? So, I mean, you know, something’s gotta give, right? I mean, I don’t plan on Social Security being available by the time I’m ready to earn.
00:25:10:19 – 00:25:26:14
Aaron Fragnito
I’m 38 years old. I mean, there’s no way Social Security is gonna be around in 30 years, so I’m just trying to build a successful company and work hard. And I know a lot of real estate and make my own retirement strategy, not rely on the government. But, you know, that’s safety. That’s important to have for a lot of people.
00:25:26:14 – 00:25:34:06
Aaron Fragnito
And, yeah. So what what do you see? Is the endgame with this just rampant spending out of Washington?
00:25:34:08 – 00:25:58:18
Earl Yaokasin
Yeah. So it’s kind of like the story of Cinderella, right? So Cinderella, she goes to the ball, but the fairy godmother turn the mice into to a carriage to a to a groom’s men. And spending works the same way. It’s unsustainable. At some point, the clock strikes midnight. And all all of the the pumpkin turns to mice.
00:25:58:20 – 00:26:22:02
Earl Yaokasin
The groomsman turns to mice again, and it’s just it’s not sustainable. It’s as if. Imagine a patient, right? A patient getting steroids and antibiotics every day. It’s at some point that medicine is going to lose its efficacy. And when it does, the first thing the government’s going to do, it’s going to try to do to pump even more medicine into the system.
00:26:22:02 – 00:26:43:07
Earl Yaokasin
But eventually the patient’s going to crash and everyone has to face the music. So imagine the average middle class American today. They’re I, I’ve heard this stat that the average American is living paycheck to paycheck, and half of Americans are in credit card debt. So so let’s just imagine that for a moment if, let’s say that were true.
00:26:43:07 – 00:27:05:21
Earl Yaokasin
Right? And if if they keep spending more than what they make, eventually they’re going to run out of people, places, institutions to, to borrow money from. And then they have to cut their spending, they have to default on their loans. The same thing is true with the US government. The US government is the strongest institution in the world today.
00:27:05:23 – 00:27:34:14
Earl Yaokasin
But if they keep doing this, eventually they’re going to be consequences. And history has shown that governments who overspend will eventually have to default on their loans, cut spending, and cut a lot of programs and benefits for their citizens. And that’s not going to be pretty. And like you mentioned, Social Security projections are being made right now that Social Security and Medicare are going to run out of funds in the early 2030.
00:27:34:14 – 00:27:40:00
Earl Yaokasin
So in less than ten years, they’re going to be running out of funds and they’re going to have to cut benefits.
00:27:40:02 – 00:28:01:09
Aaron Fragnito
Yeah, yeah. Wow. We see that’s why you got to get an in-law suite so you can give your parents somewhere to live. Yes. That’s why you want to be a successful businessman like Earl here. So you want a nice and law suite for your aging parents. And that would be a nice thing to do. All right. Also, how can people, reach out to you here?
00:28:01:13 – 00:28:08:17
Aaron Fragnito
I hate to hit and a doom and gloom note here, but, yeah. Okay, so if you get something that you know. Yes.
00:28:08:19 – 00:28:26:08
Earl Yaokasin
Well, let me just say one thing. One thing to keep in mind is that if you have gunpowder ready to fire, meaning cash conservative and the market tanks, you’re going to make a lot of money as long as you buy when the bottom hits. And so so that’s something to look forward to if you have been segregating money.
00:28:26:08 – 00:28:46:23
Earl Yaokasin
And number two, just to end up on an optimistic note, is that over the long term, ten, 20, 30 years, the stock market, the real estate market are going to be significantly higher than where they are today. So. So I don’t want to leave, leave this podcast with a doom and gloom message. But I want to add an optimistic note.
00:28:46:23 – 00:29:07:19
Earl Yaokasin
And if anybody wants to learn more about me and my firm, you can visit my wealth arch.com/pkf. So let me spell that. That’s m y w e a l t h a r c h.com/p c f.
00:29:07:21 – 00:29:27:18
Aaron Fragnito
Excellent. Thank you. Earl. Yeah. So Earl’s group made a specific website for the, passive cash flow listeners here. And I appreciate that. Earl, you can go to his website there and learn more about his company and their their past performance and what he offers, all of his clients there, which is always, interesting. And, or one more time.
00:29:27:18 – 00:29:29:04
Aaron Fragnito
What’s that website?
00:29:29:06 – 00:29:35:07
Earl Yaokasin
Yes, it’s my wealth arch.com/pix.
00:29:35:09 – 00:29:54:16
Aaron Fragnito
Excellent, excellent. Well, thank you, my friend, for coming on the show here. And to our listeners who are getting value out of this again, we’re on YouTube. We have hundreds of, videos there. We have, webinars. We have tips and tricks for real estate investors. And check out People’s Capital Group on YouTube. And also People’s Capital group.com.
00:29:54:16 – 00:30:18:21
Aaron Fragnito
We have ebooks and, seven red flags for investors, different white papers and things like that that people can enjoy. Regarding real estate investing, in fact, one of the more popular webinars I just did was called, Your Guide to New Jersey Real Estate Investing here, People’s Capital Group. We focus strictly on new Jersey. We’ve been doing this about, boy, 13 years now, helping people build and preserve their wealth from new Jersey apartment buildings.
00:30:18:21 – 00:30:44:22
Aaron Fragnito
And my business partner, Seth Martinez, and I live in about 280 transactions here in Jersey. So very active, businessmen here. We like to, really help a lot of people in the tri state area. But really all around the country as well. So if you want to learn more about our current opportunity, which is located in Hackensack, new Jersey, next, the number one hospital in new Jersey, take a look at our website, People’s Capital group.com, or get in touch with our team there or reach out to you some more information.
00:30:44:24 – 00:30:48:19
Aaron Fragnito
Earl, I appreciate you coming on the show, my friend. Thank you so much for your time.
00:30:48:21 – 00:30:52:06
Earl Yaokasin
Thank you so much for having me. It’s a it’s an honor to be on your show.
00:30:52:08 – 00:30:52:18
Aaron Fragnito
Thank you for.
