Shares vs Stock: How are both different from each other?

When you start learning about the stock market, two words come up a lot: shares and stock. Most people use these words as if they mean the same thing. But they don’t exactly mean the same. Understanding the difference will help you get a better grip on how investing works.

Owning a part of a company

When you buy shares or stock, you are buying a small part of a company. Imagine the company is like a big cake. When you invest, you get a slice of that cake. If the company does well, your slice becomes more valuable. If the company does poorly, your slice may lose value.

This idea of owning a part of a company is called equity. Both shares and stock relate to this ownership, but in slightly different ways.

What are shares?

Shares are the exact pieces you own in a particular company. If you say, “I have 100 shares of Nepal Telecom,” you mean you own 100 parts of that company.

Shares are countable and specific. You know which company your shares belong to and how many you have. It is like having 100 slices of a specific cake from a bakery.

Shares come with certain rights. Usually, shareholders can vote on company matters and get a part of the company’s profit, called dividends.

What is stock?

Stock is a more general term. When someone says, “I own stock,” they are talking about their ownership in one or more companies without mentioning the exact number or names.

For example, if you own shares in three different companies like Nepal Telecom, Nabil Bank, and NLIC, you can say, “I own stock.” Stock covers all the shares you have across different companies.

Stock does not tell you how many shares you own or which companies they belong to. It’s a broad way of describing your total investment in the market.

Why people mix shares and stock

Because the two terms are related, many people use them interchangeably. You will hear news reports say “stock prices went up” even if they mean the prices of shares in specific companies increased.

In casual talk, it’s not a big problem. But when you start investing seriously, knowing the difference helps you understand documents, reports, and discussions better.

Types of shares you should know

Shares come in different types. The two most common are:

• Common shares: These give you voting rights in the company and a chance to receive dividends. Most investors buy common shares.
• Preferred shares: These usually pay fixed dividends but often do not allow voting in company decisions. Preferred shareholders get paid dividends before common shareholders.

Knowing these types helps you understand what you own and what you can expect as a shareholder.

How to remember the difference

A simple way to keep them clear is:

• Shares are specific and countable. You say, “I own 50 shares of Prabhu Bank.”
• Stock is general. You say, “I own stock in the Nepalese market,” meaning you have shares in one or more companies.

Why this matters for investors

Using the right word makes a difference in how clearly you communicate about your money. When you talk to a broker or read company reports, understanding the difference helps you avoid confusion.

It also shows that you understand your investment better. This knowledge can help you make smarter decisions.

When you apply for IPOs or invest

If you want to apply for an IPO (Initial Public Offering), knowing the term shares is important. IPOs sell shares of a company to the public for the first time.

When you fill out forms or speak with your broker, you will see that “shares” is the word used for buying parts of one company.

What for beginners?

If you are just starting, don’t worry too much about the difference. Many new investors use “shares” and “stock” the same way, and that is okay.

But as you learn more, keep this difference in mind. It will make reading financial news and talking about investing much easier.

Owning stock means you have invested in companies. Owning shares means you know exactly how much you own and where. Knowing the difference between shares and stock is a small but useful step. It helps you become a confident investor and understand the market better. Investing takes time to learn, but every little bit of knowledge counts. This is one of those simple ideas that will help you feel more comfortable as you grow your investments.