The differences between stocks and shares

The global market, transnational companies and the banking system offer the possibility of selling or buying shares and participations to those interested. However, we live in a society alien to these terms; We listen to them daily but we are unable to detect or explain what they consist of.

In this article we will see precisely what is the difference between stocks and shares.

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The differences between stocks and shares

Within the general framework of globalization and finance associated with the IPO, in which money flows and the economy has more and more ways of transforming reality, organizations can issue shares and participations to finance themselves. Let's see how they work and what are their differences.

What are stocks?

The shares in a company are the parts into which the initial capital is divided of one this. That is, if the capital of 300,000 euros is entered by ten people, these correspond to a value of 30,000 each. In this way, individuals who provide liquid for an economic activity will be called shareholders.

These shareholders are the ones who will have a decisive vote on the measures taken by the company, the strategy to be followed, the organizational model or the infrastructure it may have. In addition, the shares are the ones that boost the growth of that capital. The more money we have more movement capacity we can have in the financial market.

The actions are those that give direct benefit to their owners, always depending on the benefits or losses that may be had. These shares can also be sold at a different price than what they were bought for. This means that if we contribute, for example, 300 euros in shares and the price of that share is on the rise, it can be sold for 500 euros, if applicable.

Ultimately, the actions determine the power of influence that one has over the society that has been created, and that influence is measured in percentages that will determine the degree of importance or weight that our voice may have in the organization. Capital is transformed into influence in decision-making based on the percentage of those issued by the entity.

The stakes

And what are shares in the economy? In this case shares clearly differ from one thing with stocks: you do not have the power to influence any type of executive, administrative or economic decision about the activity in the company or organization where these attributes are possessed.

Simply, the taxpayer contributes a certain amount, within the terms agreed between the company and the participant. The owner of the shares will benefit from an annual sum of money that will compensate for his investment. Regardless of whether the company in question turns out to have a profit or a loss, the remuneration of the shares will be fixed and annual. A balance will be made at the end of the fiscal year after twelve months.

Another differentiating characteristic between shares and participations is that the latter are, initially, perpetual in nature. That is, it has to be negotiated with the manager or CEO of the company in case of wanting to terminate a participation contract, and both parties must be in mutual consent.

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Who can be a shareholder or have shares?

Very often there is a tendency to think that only expert minds in economics have the opportunity to develop an activity of this caliber. However, Any person or individual of a legal nature has the right to obtain shares or be a shareholder occasional. It is recommended, for the user's peace of mind, to consult and obtain information correctly for a business practice.

According to the latest reports and research by economists and professors specialized in the market for values, there is a worrying legal ignorance among people who enter the world of finance. Your rights are often ignored, given the complexity and degree of interpretation subject to the conditions on units and shares.

Bibliographic references:

• Becker, Gary S. (1976). The Economic Approach to Human Behavior.
• Economics, second edition (2009), with Robin Wells.
• Friedman, David D. (2002). "Crime," The Concise Encyclopedia of Economics.