Differences between equity, shares, bond, stock & money market

The following is a guide about the differences between equity, shares, stock, bond and money market.

According to Google, the following are the definitions for equity, share and stock.

Equity = the ownership interest of shareholders in a corporation

Share = any of the equal portions into which the capital stock of a corporation is divided and ownership of which is evidenced by a stock certificate; "he bought 100 shares of IBM at the market price"

Stock = the capital raised by a corporation through the issue of shares entitling holders to an ownership interest (equity); "he owns a controlling share of the company's stock"

Therefore, if ABC owns a business with his wife, it can be said that he and his wife own the company's shares. If the company is listed as a public company to raise capital, this capital raised is known as "stock." The stock certificates are issued to other investors who pay to own shares of the stock. As ABC and his family and other investors own the shares of the company's stock, they own the equity. Equity is the ownership of the share of a business; shares are units of the equity or stock.

So, if the company owned by ABC and his wife is not public-listed, then they do not own the stocks of the company.To simplify matters,

invest in stock = invest in share = invest in equity

Bond and Money Market

Bond = a certificate of debt (usually interest-bearing or discounted) that is issued by a government or corporation in order to raise money; the issuer is required to pay a fixed sum annually until maturity and then a fixed sum to repay the principal.

Money Market = the market for short-term debt securities, such as commercial paper, certificates of deposit and Treasury bills, with a maturity of one year or less. Typically, these are safe, highly liquid investments.

The term for a bond is longer (e.g. 3, 5, 10, 20 years etc) than the money market, where the term is very short (less than a year). Money market has the lowest investment risk. The return is also relatively low, even lower than Fixed Deposit.