Last Updated on August 11, 2023 by Prakash Kolli
In this article, I provide a review of Tornado, formerly known as Nvstr. Before I proceed, I want to disclose that I am an Affiliate and Viewpoint Contributor on Tornado. I provide affiliate links to Tornado in this post, meaning that I receive compensation in the form of cash in my trading account if you sign up at the Affiliates’ website through these links. This will not incur additional costs for you.
Please read my disclosure for more information. In addition, I am a Viewpoint Contributor and receive compensation for posting Pros and Cons about stocks and ETFs.
What Is Tornado?
In this review, I want to first answer the question, “What is Tornado?” Tornado is an online brokerage and investing platform that lets investors buy stocks and ETFs traded on US stock exchanges. However, the platform differentiates itself by leveraging the knowledge of other investors.
The company was founded in 2015 by two former hedge fund employees, Bernard George and Patrick Aber. Both have professional backgrounds in quantitative investing and tech startups. Their goal in starting Tornado was to make intelligent investing accessible to everyone, including retail investors.
The founders believed that “investing platforms today are too focused on encouraging you to trade a lot, rather than empowering you with the insights and technology you need to invest intelligently.” This concept is the foundation of Tornado since the platform focuses on leveraging the collective wisdom of other investors. This collaborative effort leads to Tornado’s motto of “Always More to Learn.”
Tornado Simulated Trading Account – Review
Tornado has a free account where you can place simulated trades. For example, you can use the free account to test your stock and ETF picks and build a hypothetical portfolio. In addition, you have access to the Portfolio Optimizer. You can learn more about Paper Trading.
Importantly, you also have access to the social media content feed, where you can see the Pros and Cons of individual stocks and ETFs. The free simulated account is a place to start if you want to try out Tornado before using a live account.
Tornado Live Trading Account – Review
If you open an account and choose to fund it, you have a live trading account. You must be 18 years old and a US resident. Note that Tornado is registered with FINRA and the SEC. It is also a member of the SIPC.
Therefore, the only option is a taxable individual brokerage account. Retirement accounts and joint accounts are not available. There is no minimum deposit amount, but if you have a minimum account balance of $3,000 or more, you can use the Portfolio Optimizer with one-click trades; more on that below.
How Do You Fund Your Tornado Account?
You can fund your account by linking to a checking or savings account either through instant verification or manually. If you choose to connect your accounts manually, Tornado will send two deposits ranging from $0.01 to $1.00 into your account. You can then verify your account by entering those two deposit amounts in your Tornado account. Alternatively, you can link your bank account using Plaid.
You can link up to three bank accounts, and they can be removed at any time, and there is no fee. The minimum transfer amount from your bank accounts is $10, and the maximum is $50,000 per day.
What Do You Get for Opening and Funding a Live Trading Account?
Tornado is currently running a promotion where if you open an account, link your bank account, and place a trade; you can receive between $10 and $1,000 free cash in your Tornado brokerage account. You have a 100% chance of getting at least $10, and the probability goes down from there. For example, you have a 1 in 20 chance of getting $20, a 1 in 2,500 chance of getting $500, and a 1 in 5,000 chance of receiving $1,000.
In addition, Tornado is free for college students, which is simply awesome. College students who use their dot-edu e-mail addresses will receive a free Tornado membership until they are 26 years old.
Are There Any Fees?
Tornado is not free, unlike some other online brokerages. Tornado currently has a monthly subscription fee of $4.99 that gives you 25 commission-free trades. Trading beyond the 25 free trades or trading without a subscription costs $4.50 per trade according to the current fee schedule. However, most small investors seeking to invest and build wealth using a dividend growth strategy can probably do so with only up to 25 free trades per month.
Investment Options on Tornado
Tornado lets you buy and sell stocks and ETFs on US exchanges. For example, you can buy and sell ADRs listed on the NYSE, but you cannot buy and sell stocks that trade on foreign exchanges. In addition, you cannot trade options on Tornado, which is likely not a problem for small investors seeking to build wealth through dividend growth investing and who are not short-term traders.
Where to Start on Tornado?
The place to start for Tornado is the Dashboard. On the left column are your menu options, in the middle is your current portfolio (not shown), and on the right is the social media feed. At the top of the page, users can search for a stock or ETF in Tornado. The menu lets you navigate through Tornado. It is broken down into Portfolio, People, Ideas, Account, and Support sections.
The Portfolio Optimizer
Tornado has a unique feature called The Optimizer located under the Analysis tab of the Portfolio section. This tool makes Tornado, in effect, a robo-advisor for your portfolio. Tornado uses Modern Portfolio Theory (MPT) to optimize your portfolio. Users can even link external portfolios or add stock or ETF ideas not in your portfolio for optimization.
Tornado’s portfolio optimization tool rebalances your weightings to minimize projected portfolio volatility. The basic idea is to manage your risk. Tornado states that “The Optimizer is based on the independent, Nobel Prize-winning work of Harry Markowitz and others, who discovered an optimal solution to portfolio allocation.”
The goal of The Optimizer is to maximize your return while staying within an acceptable level of projected risk. Portfolio risk is based on the volatility of the holdings in your portfolio as well as their correlation. The Optimizer also accounts for other investment objectives such as limiting projected risk, maximum position allocation, minimum dividend income, and other constraints.
The Optimizer bases its calculations on your stated level of risk and default return. Your risk profile can be conservative, moderate, and aggressive. Investors can also set a Custom risk profile by setting the Advanced Investment Objectives. Users can also change their default return.
Tornado provides a table with your current holdings and optimized allocations at the end of the calculations. You can also see your existing and optimized portfolios’ projected return, portfolio volatility, estimated dividends, and market beta.
For example, I entered the top 10 stocks by index weight in the Dividend Aristocrats. I performed the optimization with a moderate risk profile and 8% projected return. You can see the individual stock weightings and the optimized projected return of 11.01%. The green shaded area represents the 25th to 75th percentile returns. The optimized portfolio has a standard deviation of 19.94%, 3.14% more dividend income, a 1.06 beta. The one-click rebalance is not available because this is a hypothetical portfolio.
Review – How To Get Investment Ideas on Tornado?
There are several options to get investment ideas in Tornado. These are the Pros and Cons in the social media feed, ideas from Thought Leaders, ideas from Top Performers, ideas from the Community, ideas from Explore, and your Connections.
Pros and Cons
The social media feed includes the Pros and Cons that the Community posts. It also consists of the day’s top and worst performers. Information about the actions of your connections is seen in the feed as well. You can add your own Pro or Con or agree or disagree with an existing one. As more investors agree or disagree on a Pro or Con, you can see that a stock has more ratings. The Pros and Cons also have links for more information and to let you do further research.
Anyone can post a Pro or Con, but many postings are from the Community Thought Leaders or Viewpoint Contributors. Community Thought Leaders (CTL) is select Tornado members with years of professional investing experience post Pros and Cons. You can interact with Community Thought Leaders by directly asking them about the Pros and Cons of a specific stock or ETF. Viewpoint Contributors are independent financial content creators, like Dividend Power, who post Pros and Cons.
You can check on the six Thought Leaders’ ideas, which are different from the CTLs. Thought Leaders are well-known investors and hedge funds. Thought Leaders have equity-focused investing strategies and tend to have 10+ years of investing experience, hold assets of at least $1 billion, and have fewer than 100 equity positions.
The list of Thought Leaders currently includes David Tepper of Appaloosa Management, Seth Klarman of Baupost Group, Warren Buffett of Berkshire Hathaway, David Einhorn of Greenlight Capital, Carl Icahn of Icahn Capital, and Bill Ackman of Pershing Square.
Information about their portfolios is often publicly available from SEC filings, press releases, articles, interviews, and other sources. Tornado compiles the data for you, and you can click on “View Ideas” to see their holdings.
Top Performers lists ideas from the top 10% of Nvstr users. A top performer is identified based on the past six months of history based on simulated and live trading accounts.
The popular stocks section list popular ideas from the Community. Just click on the menu option, and it shows a list of the most popular stocks in the Community. FB, MET, GOOG, SPY, and AAPL are currently the top 5. The percentage of users and the actual number of people are shown for each specific equity.
Explore is Tornado’s stock and ETF screening tool. There are pre-set screens that you can click. This action provides a list of stocks that meet that specific screen’s filter. You can adjust the settings on each criterion and add additional criteria.
The pre-set screens include Value Stocks, Famous Investors, Diversifying Stocks, Collective Intelligence, Growth Stocks, Friends’ Ideas, Juicy Dividends, Price / Tangible Book, Technology Sector, Financial Sector, Healthcare Sector, and Energy Sector. You can also create your custom screens.
As an example, I clicked the Collective Intelligence screen. This screen provides a list of stocks from other Tornado members with similar interests. The first four stocks are International Business Machines (IBM), Exxon Mobil (XOM), Coca-Cola (KO), and L3 Harris Technologies (LHX). This result is not surprising since these are all dividend growth stocks and stocks that I have posted Pros and Cons. Once you sort through the list, you can save a stock to your ideas, buy, or sell.
The last way to get some ideas is through your Connections. Since Tornado is about leveraging the collective wisdom of many investors, you should be connecting to other investors on Tornado. There is a menu option for Connections to connect with other investors. You can also connect with people posting Pros and Cons. You can view the ideas of any single connection, but you cannot see dollar values. Instead, you can ask a connection why they like the idea.
Click on any specific stock or ETF, and it opens a panel about that stock. For instance, if I click on Exxon Mobil (XOM) in the content feed, it opens the panel below. Information is seen on the stock price, daily price movement, select fundamentals, a historical price chart, and the latest SEC filings link. The data is from S&P Capital IQ. You can save XOM to your ideas, ask a connection or CTL about XOM, and buy or sell. At the bottom are News, Pros and Cons, Connections’ Ideas, and a Compare tab. Compare lets you compare XOM’s fundamentals to that of other stocks.
Learn and Earn
Tornado has a new feature called Learn and Earn. This feature is an interactive app where investors can learn about investing. The app is tailored toward your experience level and the lesson are professionally vetted. Individual investors can improve their financial literacy and earn money. In addition, tornado members with a live brokerage account can earn up to $50 when they complete the educational lesson on Tornado.
Review – What I Like About Tornado?
Combines Investing Platform with Social Media
Tornado is an online brokerage and investing platform with a social media interface. Of course, there are plenty of online brokerages that let you place trades. However, Tornado incorporates an increasingly popular trend of social media interaction in investing.
If you are not familiar with this trend, think of Twitter, Reddit, and Seeking Alpha (I am an author on SA), where members and users can post comments or ask questions. The wisdom of the collective group can help identify and talk about potential investments. However, there may not be the same level of expertise in many social media sites as those on Tornado posting Pros and Cons.
Some small investors may find the simplicity of Tornado appealing. However, most people do not have the time to go through and create screens or filters for identifying stocks. Tornado simplifies the process for you by providing pre-set screens. If you like a stock on the screen, click it, and a panel opens with more information.
Other Ways to Obtain Ideas
Besides screens, Tornado provides several other ways to find ideas than only a stock screener. For example, do you want to invest like Warren Buffett, then check his Thought Leaders portfolio? Do you want to see which stocks the Tornado community likes, then check Community? What stocks are the Top 10% of performers investing in, then click on that option? Or see what is trending in Pros and Cons.
Review – What is the Price of Tornado?
A membership subscription for Tornado is $4.99 per month. This amount gives you 25 commission-free trades per month and access to the above. In addition, you can use my link to sign up for Tornado and receive up to $1,000 in free cash in your brokerage account based on random chance.
Thanks for reading my Review on Tornado!
- One-click portfolio optimization
- Multiple ways to get stock ideas
- Earn up to $50 for completing the Learn and Earn lessons
- Social media interface lets you connect with other investors
- Free cash bonus offer to open a live trading account
- 25 trades with monthly subscription fee
- Free accounts for college students 18 to 25 years old
- No technical analysis tools
- $4.99 per month subscription fee
- Only e-mail customer support
Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.