The most evident and basic level difference between equity and commodity is the type of exchanges they are traded on. Equities are traded on NSE and BSE, commodities trade on MCX.
When you buy commodities, you’re buying raw products like copper, silver, sugar, wheat, cotton and more. These products are in very generic forms that are basic and undifferentiated. On the other hand, when you buy equities, you’re buying a share of a registered company; you’re buying a part of the ownership in that company.
Generally speaking, equities are long-term holding assets to enjoy consistent dividend from the company. Commodities are usually traded in a quick span in order to make profits in a smaller span of time.
Another difference between the two is liquidity. Equities are more liquid when compared to commodities.
These are few of many (many) differences between equity and commodity. If you’re looking to invest your money in an asset that delivers you consistent and long-term returns, equities are a way to go.
Both Equity and Commodity are the financial products on which investors can invest or trade that take place in the stock market. Equity and Commodity on the other hand, both are investment assets assets in which investors can invest their funds by purchasing or trading, we can say it like main similarities between the two.
However, it is, important to understand the difference between Equity and Commodity:
Stock Exchanges: Equities/Stocks/Shares are traded or invested on stock exchanges like BSE (Bombay Stock Exchange) and NSE (National Stock Exchange), while commodities are traded on a commodities exchange like MCX (Multi Commodity Exchange of India Ltd ).
Ownership: As mentioned earlier Equity refers to an investor’s asset that represents a part ownership of a company while commodity refers to a generic form of a product.
Investments: Both equity and commodities are investment vehicles, Equity depends on the success of the firm while commodities depends on the demand of the products.
Product Type/Profits: Commodities are undifferentiated goods and profit margins are purely focused on price changes, while equity is an investment made in a firm that provides the investor with an ownership stake and generally focused on a successful firm.
Liquidity: Liquidity involved in commodity investments are comparatively lesser than equity investments.
Time Frame: Equity investments are longer term and are focused on taking an ownership interest in a firm, commodities are bought and sold with the aim of making a profit through quick, short term trades.
Both stock or equity and commodity are investment assets. And the similarity between them ends there.