If you’ve ever wondered “What is a Share/Stock?”, you’re not alone. For many beginners, the world of the stock market feels complicated, full of jargon, and intimidating. But here’s the truth: a share or stock is one of the simplest financial concepts, and once you understand it, you open the door to an incredible world of wealth creation, business ownership, and financial growth.
In this comprehensive guide, we’ll break down everything about shares and stocks in the simplest way possible—no complicated finance language, no confusing formulas, just clear, beginner-friendly explanations. Whether you’re a student, a working professional, an investor-in-making, or someone building a personal finance habit, this article will help you understand shares like never before.
Let’s dive deep into What is a Share/Stock, how it works, why companies issue shares, how people make money from them, and how you can start your journey easily.
Table of Contents
1. What is a Share/Stock? (Simple Definition)
A share or stock represents a small unit of ownership in a company.
When you buy a share, you’re not lending money to the company; you’re actually owning a piece of it. This makes you a shareholder, meaning you have certain rights—like earning profits, getting dividends, and benefiting from the company’s growth.
A simple example:
Imagine a pizza divided into 8 slices.
If you buy 1 slice, you own 1/8th of the pizza.
Similarly, a company divides its ownership into many “slices” known as shares.
Anyone who buys these shares becomes part-owner.
So, when someone asks, “What is a Share/Stock?”—
you can simply say:
A share is a piece of a company that you can buy, sell, or hold to earn returns.
2. Why Do Companies Issue Shares?
Just like people need money to grow—companies need money too.
They raise money for:
- Expanding into new markets
- Launching new products
- Hiring more employees
- Buying machinery
- Paying off debt
- Strengthening research and development
To raise such funds, companies have two main choices:
- Take a loan, which must be repaid with interest
- Issue shares, which give part ownership to investors
Most fast-growing companies choose the second option because:
- They get money without repaying it
- They don’t have to pay interest
- They build a large pool of investors
When a company issues shares for the first time to the public, it is called an IPO (Initial Public Offering).
3. How Do Shares Work? (With Real-Life Example)
Let’s say Company ABC is worth ₹1,00,00,000 (1 crore).
They divide their ownership into 10,00,000 shares.
So each share is worth:
₹1,00,00,000 ÷ 10,00,000 = ₹10 per share
Now ABC sells these shares to the public at ₹10 each.
If you buy 1,000 shares:
- You invest: 1,000 × ₹10 = ₹10,000
- Your ownership: 1,000 out of 10,00,000 = 0.1% of the company
If the company grows and the share price becomes ₹50:
Your investment becomes:
1,000 × ₹50 = ₹50,000
This profit is called capital appreciation.
This is exactly how shares work in real markets like NSE, BSE, NYSE, or NASDAQ.
4. Shares vs Stocks — Are They Different?
Many beginners get confused between the two words.
So here’s the simplest answer:
There is NO difference.
- “Share” is usually used for a particular company
- “Stock” is a more general term
Example:
- “I bought 50 shares of Reliance.”
- “I invest in stocks.”
Both refer to the same thing—company ownership.
5. Types of Shares You Should Know
To fully understand What is a Share/Stock, you should know its types.
1. Equity Shares (Common Shares)
These are the most popular.
Owners of equity shares:
- Can earn dividends
- Can vote in company decisions
- Benefit the most when company grows
2. Preference Shares
These shareholders:
- Get dividends first
- Have priority over equity shareholders during liquidation
- Usually don’t have voting rights
3. Bonus Shares
Free shares given to existing shareholders.
Example: 1:1 bonus → Get 1 share free for every 1 owned.
4. Rights Shares
Company offers additional shares to existing shareholders at a discounted rate.
5. Blue-Chip Shares
Shares of stable, well-established companies like:
- TCS
- Reliance
- HDFC Bank
These are known for consistent performance.
6. How Do People Make Money from Shares/Stocks?
Understanding What is a Share/Stock also means understanding how investors earn from it.
Investors earn in two main ways:
1. Capital Gains (Buying Low, Selling High)
If you buy a share at ₹100 and sell at ₹150, you earn ₹50 profit.
This is the most common way investors make money.
2. Dividends (Profit Sharing)
When companies make profits, they share part of it with shareholders as dividends.
Example:
If a company announces a ₹10 dividend and you hold 1,000 shares,
you earn: 1,000 × ₹10 = ₹10,000
These two income sources make stocks one of the best long-term investments.
7. Where Are Shares/Stocks Traded?
Shares are traded in marketplaces known as stock exchanges.
Popular Stock Exchanges:
- NSE – National Stock Exchange of India
- BSE – Bombay Stock Exchange
- NYSE – New York Stock Exchange
- NASDAQ
These exchanges provide a secure digital platform to buy and sell shares instantly.
8. What Is the Stock Market?
The stock market is simply a place where buyers and sellers trade shares.
Think of it like Amazon—but instead of products, people buy and sell company ownership.
9. How Does the Share Price Change?
Share prices change every second based on:
- Demand and supply
- Company performance
- Future growth potential
- Economic conditions
- Government policies
- Global news
- Market sentiment
Basic rule:
- If more people want to buy → Price goes up
- If more want to sell → Price goes down
This constant movement is what makes stock investing exciting and profitable.
10. What Determines the Value of a Share?
Many factors decide the share value:
1. Company Earnings (Most important)
A company earning high profits usually sees rising share prices.
2. Market Sentiment
If people think a company will grow, demand increases.
3. Industry Trends
If the entire sector is booming (like IT or Pharma), shares rise.
4. Global Factors
War, inflation, oil prices, elections—everything matters.
5. Corporate Announcements
- New product launch
- CEO change
- Quarterly results
- Mergers and acquisitions
These events can make a share skyrocket or crash.
11. Is Investing in Shares Risky?
Let’s be honest—yes, shares carry risk.
Prices can go up or down, sometimes sharply.
But here’s the secret:
Long-term investors almost always make money.
The stock market rewards:
- Patience
- Discipline
- Research
- Long-term vision
Short-term traders take more risks.
Long-term investors build more wealth.
12. Why You Should Invest in Shares
There are many reasons why shares are one of the best investments.
1. High Returns
Historically, stock markets give 12–15% annual returns—much higher than fixed deposits or gold.
2. Beat Inflation
Your money grows faster than inflation.
3. Ownership in Big Brands
Imagine owning:
- Tata
- Infosys
- HUL
- Apple
- Amazon
Shares make it possible.
4. Passive Income Through Dividends
Many companies pay regular dividends—like monthly or yearly income.
5. Liquidity
You can buy or sell shares anytime.
6. Easy to Start
Just open a Demat account and begin with as little as ₹100.
13. What Is a Demat Account and Why Do You Need It?
A Demat Account stores your shares digitally—just like a bank account stores money.
You cannot buy or sell shares in India without:
- Demat Account
- Trading Account
- Bank Account
Brokers like Zerodha, Groww, Upstox, and Angel One provide these accounts.
14. How to Start Investing in Shares/Stocks (Beginner Roadmap)
Here’s the simplest plan:
Step 1: Open a Demat + Trading Account
Choose trusted brokers with low charges.
Step 2: Learn the Basics
Don’t rush. Understand:
- Risk
- Market trends
- Company fundamentals
Step 3: Start with Small Investments
Even ₹500 is enough to begin.
Step 4: Pick Good Companies (Blue-Chip Stocks)
These are safer and more stable.
Step 5: Hold for Long-Term
Wealth grows with time.
15. Beginner Mistakes to Avoid in the Stock Market
To fully understand What is a Share/Stock, you should also know what not to do.
❌ Don’t invest based on tips
Most tips mislead beginners.
❌ Don’t panic during dips
Markets always recover.
❌ Don’t put all money in one company
Diversify.
❌ Don’t check the price every minute
Let your investments grow naturally.
❌ Don’t expect quick profits
Stock investing is a marathon, not a sprint.
16. Key Terms Every Beginner Should Know
Here are simple meanings:
Market Capitalization
Company size (shares × price)
Dividend
Profit shared with shareholders
Bull Market
Prices are rising
Bear Market
Prices are falling
Portfolio
Your collection of investments
IPO
Company sells shares to public for first time
17. What Happens After You Buy a Share?
Once you buy shares:
- They get added to your Demat account
- You become a shareholder
- You can:
- Hold them
- Sell them
- Receive dividends
- Vote in company decisions
You are now part owner of the company, no matter how small your percentage.
18. Why Share Prices Sometimes Crash?
Stock market crashes happen due to:
- Global financial crises
- Economic slowdown
- Poor company performance
- Political instability
- Natural disasters
- Negative news
- Panic selling
But historically, the market has always recovered and grown stronger.
19. Should You Invest in Shares/Stocks?
If your goals are:
- Wealth creation
- Financial independence
- Beating inflation
- Passive income
Then yes, stocks are one of the best tools.
But invest only after learning the basics.
20. Final Summary: What is a Share/Stock?
A share or stock is a small unit of ownership in a company.
When you buy shares, you become a shareholder and gain rights to:
- Company profits
- Dividends
- Capital growth
- Voting rights
Shares are traded in stock markets, and their prices fluctuate based on demand, supply, and market conditions.
Investing in shares can be risky but also highly rewarding—especially if done with patience and knowledge.
Conclusion
Understanding What is a Share/Stock is the first—and most important—step towards smart investing and long-term wealth creation. Shares give ordinary people the extraordinary opportunity to own part of the world’s biggest companies and participate in their success.
Whether you’re just starting your financial journey or looking to expand your investment knowledge, shares are one of the simplest and most powerful tools you can learn about.
Now that you truly understand What is a Share/Stock, you are ready to explore more concepts like:
- How to pick the right stocks
- What is SIP in stocks
- How to read financial statements
- How to avoid stock market mistakes
- Best stocks for beginners