This paper examines the relationship between cognitive abilities and stockholding using data from the Survey of Health, Ageing and Retirement in Europe (SHARE), which includes detailed information on wealth, portfolio composition, and three indicators of cognitive abilities: mathematical ability, verbal fluency, and recall. The study finds that the propensity to invest in stocks is strongly associated with cognitive abilities, both for direct stock market participation and indirect participation through mutual funds and retirement accounts. The decision to invest in less information-intensive assets like bonds is less strongly related to cognitive abilities, suggesting that the association between cognitive abilities and stockholding is driven by information constraints rather than preferences or psychological traits. The paper explores three channels through which cognitive abilities might affect stock market participation: information costs, risk aversion, and overconfidence. Cognitive abilities are associated with the ability to process information, which is crucial for making financial decisions. Lower cognitive abilities may lead to higher perceived costs of investing in stocks and a greater likelihood of non-participation. Additionally, cognitive abilities are linked to risk aversion and overconfidence, which can influence investment decisions. The study uses SHARE data to measure cognitive abilities and analyze their impact on stockholding decisions. The results show that higher cognitive abilities are positively associated with stockholding, both directly and indirectly. The effects of cognitive abilities on stockholding are robust across different specifications and are not confounded by other factors such as health status, social activities, or bequest motives. The paper also finds that cognitive abilities are positively associated with financial wealth and income, suggesting that individuals with higher cognitive abilities may have lower costs of stockholding and higher financial sophistication. The study highlights the importance of cognitive abilities in financial decision-making and suggests that improving financial education and information access could enhance financial participation. The findings have implications for policy, as they suggest that policies aimed at improving financial literacy and information access could help increase stock market participation, particularly among individuals with lower cognitive abilities. The paper concludes that cognitive abilities play a significant role in financial decision-making and that understanding this relationship is crucial for improving financial inclusion and economic welfare.This paper examines the relationship between cognitive abilities and stockholding using data from the Survey of Health, Ageing and Retirement in Europe (SHARE), which includes detailed information on wealth, portfolio composition, and three indicators of cognitive abilities: mathematical ability, verbal fluency, and recall. The study finds that the propensity to invest in stocks is strongly associated with cognitive abilities, both for direct stock market participation and indirect participation through mutual funds and retirement accounts. The decision to invest in less information-intensive assets like bonds is less strongly related to cognitive abilities, suggesting that the association between cognitive abilities and stockholding is driven by information constraints rather than preferences or psychological traits. The paper explores three channels through which cognitive abilities might affect stock market participation: information costs, risk aversion, and overconfidence. Cognitive abilities are associated with the ability to process information, which is crucial for making financial decisions. Lower cognitive abilities may lead to higher perceived costs of investing in stocks and a greater likelihood of non-participation. Additionally, cognitive abilities are linked to risk aversion and overconfidence, which can influence investment decisions. The study uses SHARE data to measure cognitive abilities and analyze their impact on stockholding decisions. The results show that higher cognitive abilities are positively associated with stockholding, both directly and indirectly. The effects of cognitive abilities on stockholding are robust across different specifications and are not confounded by other factors such as health status, social activities, or bequest motives. The paper also finds that cognitive abilities are positively associated with financial wealth and income, suggesting that individuals with higher cognitive abilities may have lower costs of stockholding and higher financial sophistication. The study highlights the importance of cognitive abilities in financial decision-making and suggests that improving financial education and information access could enhance financial participation. The findings have implications for policy, as they suggest that policies aimed at improving financial literacy and information access could help increase stock market participation, particularly among individuals with lower cognitive abilities. The paper concludes that cognitive abilities play a significant role in financial decision-making and that understanding this relationship is crucial for improving financial inclusion and economic welfare.