StashLearn
Get the app
Get the app

Join millions of investors on Stash

Investing, simplified

Start today with as little as $5
Get the app
Teach Me

Stocks vs. Shares: Everything You Need to Know

February 13, 2019
Stocks vs. shares

2 min read

People often use the words “shares” and “stocks” interchangeably. But they’re a little different.

Let’s break it down.

Stocks vs. shares

A public company issues stock, which it offers for sale on an exchange. As an investor, you can buy and sell shares of that stock.

Think of shares as the individual units of a company’s stock. So when you purchase a company’s stock, you’re actually buying some of its shares.

Shares are assigned a monetary value (in the U.S., shares are in dollars), and that value fluctuates throughout the course of the day. That means the value of your shares will move up and down, depending on what’s happening with the company.

What are fractional shares?

A fractional share, as its name implies, is a fraction of a share, or less than a whole share of a company’s stock. And some trading platforms, including Stash, let you buy fractional shares.

Why would someone want to invest in fractional shares, instead of buying a whole share? The price of even a single share of stock for some companies can be hundreds, or even thousands of dollars.

Purchasing fractional shares can help you start investing with just a little bit of money, rather than paying the full price for whole shares.

Preferred vs. common shares

Shares can be either preferred or common. Common stock is what most people buy.

Preferred stock typically carries a specified dividend, and in situations such as bankruptcy has some priority over common stock. In cases where the company stock is increasing, the value of preferred stock will not increase as much as the value of common stock.

Voting rights

When you own common shares of a company’s stock, that also gives you some voting rights.

You can vote on the selection of board members, on whether a stock splits, as well as on mergers and acquisitions, among other things. Preferred shares usually have no voting rights.

Good to know: You need to own a whole share of a company’s stock to have voting rights. So if you own a less than a full share—for example a fractional share—you won’t have voting rights.

Fun fact

In the old days, companies issued paper certificates to indicate the number of shares you owned. Today, stock ownership in the U.S. is pretty much all digital.

An entity called the Depository Trust & Clearing Corporation (DTCC) serves as a central clearing house for the trading and settlement of stock.

Keep on Stashing

Investing isn’t as complicated as it sounds. Once you learn some basic terms, you can start on your journey with confidence.

By Jeremy Quittner
Jeremy Quittner is the senior writer for Stash.

Next for you
Investing in Fractional Shares on Stash

Investment Profile

Bonds Worldwide

An International Bond ETF on Stash

Learn more
Explore more articlesChoose a topic to learn more about
Careers love and money social media politics market news
Disclaimers

This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Before investing, please carefully consider your willingness to take on risk and your financial ability to afford investment losses when deciding how much individual security exposure to have in your investment portfolio.

Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. Stash does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Stash does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. For more information please visit www.stashinvest.com/disclosures.