Difference Between Stocks and Shares
The key difference between stock and shares is that stock is the broad term which is used more generally to represent the ownership of a person in one or more than one companies in the market, whereas, the term share in comparatively a narrow term which is used to represent the ownership of a person in a particular single company in the market.
There’s a slight difference between Stocks and Shares. There’re two certificates that we see in terms of the ownership of the company/companies.
We call them the “certificate of stocks” and the “certificate of shares”.
- When an owner of equity maintains ownership for a particular company, we would call it the certificate of shares.
- And an owner of equity owns certificates of several companies; we would call it the certificates of stocks.
So, we can see that the slight difference is in the particularity.
Let’s say that Mr. Treehouse has bought the certificates of Youth Inc. In this case, we will call the certificates as shares since we can see that Mr. Treehouse has bought certificates from a “particular” company.
Now, if we say that Mr. Treehouse owns certificates from several companies, we would call them certificates of stocks.
That means, we can say that share is a smaller unit of stock.
Since a share is a particular certificate of a company, it can be issued in three ways –
- At par value: In this case, the share is issued at a meager
- At premium: In this case, the share is issued at above the face value.
- At discount: In this case, the share is issued below the face value.
The shares can also be divided into two types – equity shares and preferred shares. As we know equity shareholders have the voting rights but are paid after debt holders and preferred shareholders. Preferred shareholders get the preferential rights and also get paid first (after the debt holders).
Since the stocks don’t mean the shares of a particular company, we understand stock as a generic term.
Stocks vs Shares Infographics
- The stock is a generic term. When we mention stock, we say it like this – “the investor invests in stocks”. Share, on the other hand, is quite specific. When we mention share, we say it like this – “Mr. U has bought shares of Tea Shop Inc.”.
- The stock is a macro concept. And the share is a micro concept. When we say stock, we cannot specify a particular investment. But when we say share, we mean a particular company. For example, if we understand the difference between the automobile and the car, we would be able to understand the differences between stock and share.
- To a layman who doesn’t go in the intricacies, will understand stock and share as the same thing, because there’s not much difference.
- The stock is generic, thus cannot be used when we talk about types. However, in the case of shares, we can have two types of shares – equity shares and preferred shares. And in the case of shares, we can also show they’re issued. The shares can be issued in three ways – at par value, at a premium, and at discount.
|Basis for comparison||Stocks||Shares|
|Meaning||It is the larger form of a share.||It is a smaller unit of stock.|
|Relationship with the owner||When the owner owns the shares of several companies, we say that the owner owns stocks.||When the owner owns the shares of a particular company, we say that the owner owns shares.|
|Term||The stock is a generic term. When an owner owns stocks we can’t specify them as shares of a particular company.||Share is a specific term. When the owner owns shares, we can ask about a particular company.|
|Example||Mr. A invests in stocks (this statement doesn’t require any further questioning).||Mr. B has invested in shares (then the next question would in which company, how many shares, what type of shares, etc.)|
|Macro & Micro||Stock can be compared to the automobile (industry).||Shares can be compared to the car (particular company).|
When it comes down to understanding both of these stocks and shares, understanding shares is more important than stocks. Understanding shares will help you understand the meaning of par value, the face value of the shares and also what issued at a premium and issued at a discount means. Plus, you will also be able to understand the nitty-gritty of equity shares and preferred shares.
However, the stock is all about understanding that an investor/group of investors has been into stock investment.
Stocks vs Shares Video
This has been a guide to stocks vs shares. Here we discuss the top 5 differences between stocks and shares along with examples, infographics, and comparative table. You may also have a look at the following articles to learn more –