This paper has two main sections: (i) a three-asset (bond, domestic and foreign stocks) life-cycle model; and (ii) Heckman regression analysis on foreign stocks holdings. Both sections identify three important factors that influence the investor's decision to participate in stocks. These factors are liquidity, human capital and information costs. We find that the lack of liquidity, riskier human capital, higher human capital to wealth ratio, and higher information costs all give rise to non-participation in stocks or foreign stocks. These results suggest that non-participation in foreign stocks (the home equity bias puzzle) or any stocks (the equity bias puzzle) are driven by the same dynamics.