Shares vs Stocks
The companies around the world raise money for their operations and future expansions through many ways like loan from banks, issuing bonds, issuing shares and taking private loans. Most companies prefer to raise money through stock market by issuing shares. A share is an instrument that is issued to its holder as a part owner of the company. The rate at which share is issued is called its face value. A person holding shares of a particular company is called the share holder. Now if a person is holding shares of many companies at the same time, then his holding is called stock. A stock is the total portfolio of a person which describes the number of shares he is holding in different companies. If a person is holding share of one company only then total number of shares collectively is called his stock.
Share is a unit issued by a company at the time of raising fund from the market. It is a certificate issued to a person who applies for it and is given at a value predetermined by the company. Shares can be of different types and are issued by the company in accordance with the laws of the country in which they are issued. These shares are free to be traded on the stock exchanges and can be bought or sold through them. A person holding the shares of a company has the privilege of voting in the annual meetings as the part owner of the company. Annual dividend is also received by the holder, the amount as decided by the board of the company. Market price of the share is governed by the demand and supply situation, it means when there are few sellers and more buyers the price of the share goes up and vice versa. Investment in shares is a risky thing as its price is not constant and can go below its face value when the stock market crashes incurring losses to the investor.
Stocks in the reference of stock market are the total number of shares a person has in one company or in many companies. Stocks and shares are commonly used terms for the instruments issued by a company for raising funds. Stocks of a company can be defined as total units of share that makes a person part owner in that company. A stock can be of two types namely common stock or preferred stock. The preferred stock does not entitle voting rights to its holder, but it entitles voting rights to the common stock holder. The preferred stock holder receives dividend before it is given to the common stock holder. The dividend value is usually higher in the case of preferred stock holders. These stocks investment are always subjected to risks and investments should be done under the guidance of an expert.
Difference between Shares and Stocks
Shares and stocks are the terms used for same thing and that is investment of an investor in a company. These terms are used to define the extent of ownership of a shareholder in one or more company. A person having shares is said to own that company by the percentage of shares that he holds in that company. A person holding stocks can be owner in one or many companies. Both shares and stocks are traded through stock exchanges where they can be sold or bought. Shares and stocks are issued by the companies after the approval of local government and at the price decided by the government bodies, directors of the company and the banks that manage the issue. The main difference between shares and stocks is that shares are sub divided into single units whereas stocks are the collective units of shares.
It can be said that when we are talking about shares and stocks we are talking about one and the same thing. Both these terms are used to indicate the amount of money one has invested in a company or many companies. Shares indicate the amount invested in one company whereas stocks indicate the money invested in one or many companies. Both entitle a holder certain ownership in the company and both are liable to be risky in nature. It is always advisable to hold stocks of different companies of different sectors rather than shares of a single company. This type of investment saves a person from risks of losing money in case one sector fares bad in its performance.
Share Tips says
Thanks for detailing the difference between stocks and shares. Your blog is informative on various topics.
Andrews Naresh says
Tanx a lot for this wonderful briefing on stock and shares, the blog is presented in simple english which makes me understand easily and really its very informative.