China ranks third after the United States and Japan in terms of household wealth, according to the 2016 Global Wealth Reportby Credit Suisse.
But, even as GDP growth slows, in the next five years, China's wealth will likely remain on a strong upward trajectory, growing at 9.2 percent annually, to reach $36 trillion in 2021, the report said.
The consequent massive demand for financial products and professional wealth management services has not been matched by adequate supply.
This meant stocks and property remained key investment avenues for long. But the rollercoaster ride of the stock market in 2015, and the latest round of tightening measures by the government to tame the runaway home prices, have created a deep sense of uncertainty about investment prospects.
Driven by the desire to preserve and grow their wealth, small investors are seeking alternative investment options.
Life insurance, hedge funds, online financing, peer-to-peer or P2P lending, even trading in virtual currency Bitcoin ... have all faded into investment focus of late.
But some analysts said high-yield but risky investments ought not to be small investors' choice.
Thomas Deng, chief investment officer for China at UBS Wealth Management, said Chinese families would do well to buy property at prime locations in top-tier cities such as Beijing and Shanghai.
"The CPI (Consumer Price Index) is around 2 percent for 2016 (and forecast to be 3 percent for 2017), which means inflation is not an immediate concern. But every family can get a sense of it when they compare the rise in their income with the rise in housing prices, food prices and their children's education costs."
Xu Yongwei, chief investment officer of insurer Manu-life-Sinochem Co, said Chinese families should consider allocating a portion of their wealth to mutual funds.
"They are less risky and more transparent. When picking a (mutual) fund, one needs to look at its investment performance for at least the past five years, instead of just focusing on the promised rate of returns," Xu said.
Stable but lower-yield mutual fund products are likely to regain favor among Chinese small investors as the financial regulators, in a bid to rein in shadow banking risks, have stepped up regulation of high-yield but dubious wealth management products sold by banks to retail customers.
For example, many risky financing projects and corporate debt have been packaged into banks' high-yield wealth management products.
Andrew Wang, chief investment officer of Manulife Teda Fund Management Co Ltd, said tighter regulation will be positive for the mutual fund industry as it will help chael money from risky investment products to more transparent products.
Also, small investors such as He are no longer expecting very high returns. Their risk appetite is shrinking in an environment of increased financial volatility and low interest rate. All this will increase the attractiveness of mutual funds, Wang said.
"The less-transparent products have been eating into our market share. We'd like to see some capital flow back to mutual funds as a result of tighter regulation," he said.
Despite recent tighter controls to prevent illegal capital outflows, some of Chinese families' money could well reach overseas investment markets as investors continue to diversify risks, said Deng of UBS.
While the greenback is facing short-term correction pressure, its purchasing power will continue to be strong; so, holding dollar-denominated assets will make eminent sense for investors, he said.
