Stock holdings over the life cycle: Who hesitates to join the market?

•We investigate the life-cycle pattern of Chinese households’ stock holdings, that is, the heterogeneity of risk-taking among individual families.•It is proved that there is a pronounced life-cycle pattern for households who invest in stocks, which can be attributed to having to meet large financial obligations during middle age and which gives a clue of the low participation of households in the capital market despite high savings rates.•We apply the novel method of nonparametric quantile regression to give a comprehensive study.•We employ a unique micro survey dataset of the financial portfolios of Chinese households.•We use sample raking to make the sample representative. In this paper, we study the empirical relationship between age and individual wealth held in stocks, focusing on the heterogeneity of risk-taking over the life cycle in the population. We use micro-data and nonparametric quantile regression to argue that there is a pronounced life cycle pattern of risk-taking for households, which is conditional upon ownership. Specifically, we show that the fraction of stock investment decreases to bottom significantly in midlife and increases afterwards, contradicting the popular evidence claiming a hump-shaped pattern. The pressure of large financial obligations during middle age may be the reason for the crowding out of stock market risk-taking and could induce low capital returns for households.