Finizi gets investors best return rate

The Digital Media Zone company Finizi launched recently and is set on getting users the most out of their savings. Steve Goetz reports

As students, it can be easier to defer financial concerns to some unforeseen later date — after we land that dream job with its six-figure salary.

But Daniel Shain, 25, the founder and CEO of Finizi thinks now is the perfect time for students to think about their finances. Finizi is the latest start-up out of Ryerson’s Digital Media Zone (DMZ).

Last week, his company launched a website designed to help Canadians receive better rates of return when they invest in a Guaranteed Investment Certificate (GIC). The site helps users auction their business to the highest-bidding financial institution.

“Students should condition themselves to start saving early on,” said Shain. “With compounding interest, the earlier you start, the more money you are going to make.”

A GIC can be purchased from a bank or trust company and comes with a guaranteed rate of return over a fixed period of time. An investor lends money to the financial institution, and they promise to pay it back with interest at a future date.

GICs can be purchased for as little as $500 and for periods as short as a single day or up to five years. The return on a GIC is often more than on a typical savings account, but less than what can be made buying bonds or stocks. Unlike stocks, GICs are government-backed so a bank failure won’t wipe out an investment.

A GIC is a great option for students and other investors who need their money available in the near future and who haven’t mastered the art of picking stocks.

“They are a safe investment,” Shain said. “Some of your money you have to keep in liquid form. You can’t just put it all in the stock market.”

“GICs are very simple to understand,” Shain said.

Shain came up with the Finizi-model while working for a bank.

“When I was working at the branch, I had a lot of discretion over rates for GICs and mortgages. People didn’t know that or use it as leverage,” Shain said.

Users of Finizi’s online service open an auction for the GIC they want to purchase, selecting the amount to invest and the period of time. Participating financial institutions then bid for the users’ business by offering competitive rates of return.

Finizi hopes to build on the number of financial institutions participating — five as of last week’s launch — and, in the future, auction car loans and mortgages.

“The rate you get will depend on how much shopping around you do and how much negotiating,” he said. “So I figured, why can’t we put the power in the hands of consumers?”