Especially now that people are becoming financially aware, it is being used more commonly amongst the young and old, alike. While we surely know that the words ‘shares and stocks’ are a part of the financial language, it can get very difficult to make sense of their meaning. Are they the same things or are they completely different? It’s all a mystery, but not anymore. Let’s decode the meaning behind these much-used terms today.
What are Shares?
Shares refers to the smallest unit of a stock. So, when a person buys shares of a company, she or he becomes the shareholder of the company. Let’s understand this with an example. P bought 100 units of shares of Company G. Company G has 1000 shares. So, now P holds 10% shares in Company G.
What are Stocks?
Stocks refers to the part ownership in one or more companies. So, when a person buys stocks of a company, she or he becomes a shareholder or stakeholder of the company. Let’s understand this with an example. K bought 100 units of shares of Company 3. Company 3 has 1000 shares. So, now K owns 10% stocks of Company 3. Moving on, K buys another 200 units of shares of Company G and Company G has 4000 shares. So, now K owns 5% stocks of Company G.
Are they really different?
You must be wondering by now that these two things sound so similar. So is there really any difference between shares and stocks?. Well in the most generic usage of the terms, shares and stocks are actually the same things and they can be used interchangeably. Shares are a part of stocks, so in the large scheme of things, you can say shares hold a smaller value here whereas stocks hold the bigger value.
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