What is the difference between a stock and a share?
The difference between these two terms is often blurry in financial markets. People who speak US English tend to use these words interchangeably as a reference to ownership in a public company or financial equities, generally speaking. Today, the distinction is mainly derived from the context, in which these terms are used.
Usually, people tend to overlook the minor difference between stocks and shares. Varying use of the terms has less to do with legal or financial accuracy and more with syntax. We can say the two refer to the same thing for all intents and purposes. You need a brokerage account to buy stocks or shares of stocks.
Stocks is the more general term
Stocks is more generic and general. People frequently use it to describe some degree of ownership of one or more companies. When you want to make a reference to ownership of a specific company, you’d use the term “shares”, which is more specific. If you were to say you owned shares, people would be more likely to ask you “in which company” than if you were to say you owned stock.
If someone were to ask their broker to buy 500 stocks, it would be interpreted as stocks in 500 different companies. If they said “500 shares” instead, it would mean shares in one single one.
People can own shares of different types of instruments, including real estate investment trusts, ETFs, limited partnerships, mutual funds, and more. On the other hand, stocks refer only to securities traded on the exchange.
Stocks are synonymous with companies
Brokers often use these terms as synonyms, speaking of publicly listed companies. They might be talking about blue chip stocks, food sector stocks, large cap stocks, small cap stocks, value stocks, or energy stocks. The stocks themselves aren’t as important as the companies issuing them in this case.
A share is the smallest stock denomination
A share is the smallest company stock denomination. It’s the right term to use if you’re dividing and distributing stock and talking about specific features.