Difference Between Shareholder and Investor

In modern times, an investor and a shareholder look like similar persons because investing in shares and stocks is the most common mode of investment these days. However, an investor need not necessarily be a shareholder. Investing your money in anticipation of attractive returns is not a new habit that came about after the world knew about share. People have been investing before the formation of companies and there are differences between a shareholder and an investor that will be highlighted in this article.

A shareholder is strictly a person who trades in shares of a company that is listed in stock exchange which means that the shares of the company are publicly traded. A shareholder buys and sells shares in a planned strategy to maximize his returns. A shareholder is a kind of investor who is obviously a stakeholder in one or more than one companies.

Investor on the other hand is a very broad term, and even a person who has invested in fixed deposits or a bank account is called an investor. Whether an investor or a shareholder, putting in own money in another one’s venture is a characteristic that is common to both. So, a person buying real estate (a plot or an apartment) in anticipation of its prices appreciating and then making a decent profit in the transaction when he sells the property is called an investor. An investor can hold many types of assets besides just shares and debentures of a public limited company. Thus all shareholders classify as investors as they are putting their money in shares of a company expecting growth and better returns.

Shareholders are dependent on growth of the company that declares dividends on its profit that are given to them. A general investor, on the other hand can put in his money and even withdraw at any time he feels he is not getting enough return on investment.