If you are new to the world of investing, you’ve probably heard people talk about “shares or stocks” all the time. But what exactly are they? And why do they matter so much in the financial world?
In this beginner-friendly guide, you’ll learn everything you need to know about shares or stocks in the simplest way.
What are Shares or Stocks?
In simple words, shares or stocks represent ownership in a company.
When you buy a share (also called a stock), you are buying a small part of that company. This means you become a part-owner — even if your ownership is tiny.
For example:
If a company has issued 1,00,000 shares, and you buy 100 shares, you own 0.1% of the company.
That’s right — when you buy a share of Reliance, TCS, or Infosys, you technically become a part-owner of that huge company!
Difference Between Shares and Stocks
| Term | Meaning |
|---|---|
| Share | Ownership in a specific company (like 10 shares of Infosys) |
| Stock | General term for ownership in companies (like “I own stock”) |
So when someone says “I own stocks,” they mean they own shares of one or more companies.
Why Do Companies Issue Shares or Stocks?
Companies need money to grow, expand, launch products, or enter new markets.
They can raise this money by:
✔️ Taking loans (debt) — but this has to be repaid with interest
✔️ Issuing shares (equity) — no repayment, but investors become part-owners
When a company issues shares through an IPO (Initial Public Offering), it invites the public to invest money in exchange for ownership.
Example: When Zomato launched its IPO, it offered its shares to the public to raise money for expansion.
Why Do People Buy Shares or Stocks?
People invest in shares or stocks mainly for two reasons:
1. Capital Appreciation (Price Increase)
If you buy a share at ₹100 and its price rises to ₹150, you make a profit of ₹50 per share.
2. Dividends (Profit Sharing)
Some companies share their profits with shareholders in the form of dividends.
For example, if you own 100 shares and the company declares a ₹5 dividend, you get ₹500 in your account.
Types of Shares or Stocks
1. Equity Shares
✔️ The most common type
✔️ Gives ownership and voting rights
✔️ Prices fluctuate daily based on market conditions
2. Preference Shares
✔️ Fixed dividend rate
✔️ Priority over equity shareholders in case of company liquidation
✔️ Rarely traded in the stock market
For beginners, equity shares are usually the focus because they are traded daily on stock exchanges.
Where Are Shares or Stocks Traded?
In India, shares are traded on:
✔️ Bombay Stock Exchange (BSE)
✔️ National Stock Exchange (NSE)
To buy or sell stocks, you need:
- A Demat account (to store shares)
- A Trading account (to buy/sell shares)
Platforms like Zerodha, Groww, and Upstox make this very simple for beginners.
How Does Share Price Change?
The price of a stock or share depends on demand and supply in the market.
✔️ If more people want to buy the share — price rises
✔️ If more people want to sell the share — price falls
Other factors affecting prices:
- Company performance
- Industry growth
- Economic conditions
- Global market trends
- Government policies
Example: If Infosys reports great profits, its share price may rise because investors expect better future returns.
Benefits of Investing in Shares or Stocks
✔️ Higher returns compared to savings or fixed deposits
✔️ Ownership in India’s top companies
✔️ Opportunity for wealth creation over time
✔️ Liquidity — you can sell anytime on the stock exchange
✔️ Dividends provide passive income
Risks of Investing in Shares or Stocks
Market risk — prices can go up or down
✔️ No guaranteed returns
✔️ Requires research and patience
✔️ Emotional decisions (like panic selling) can lead to losses
But don’t worry — by learning regularly and starting small, you can minimize these risks.
Things to Know Before Buying Shares
- Open a Demat and Trading account.
- Set your investment goals (short-term or long-term).
- Learn to read company financial reports.
- Avoid rumors and tips — trust your own research.
- Invest only what you can afford to keep for a few years.
Final Thoughts
So now you know — shares or stocks are nothing but tiny parts of a company that you can own!
When you buy shares, you don’t just invest money — you invest in the future of businesses that shape the economy.
Start small, stay consistent, and you’ll soon feel confident as an investor.
Quick Recap:
✔️ Shares = Ownership in a company
✔️ Stocks = General term for shares
✔️ Earn profits via price appreciation and dividends
✔️ Traded on BSE and NSE
✔️ Best way to grow wealth for long-term investors