Japan's tax-free investing program is failing to draw new stock buyers as the benefits expire too soon and young people fail to see its advantages, said the founder of the Sawakami Fund.

The Nippon Individual Savings Account program is being overlooked because its exemption on capital gains and dividend taxes only holds for five years, said Atsuto Sawakami, whose eponymous fund has ¥295 billion ($2.9 billion) in assets. The rule means NISA will not foster a culture of long-term equity investment and will be used primarily by investors close to or in retirement, who already buy stocks anyway, he said.

Japan introduced the tax breaks from Jan. 1 to encourage individuals, especially younger workers, to shift some of their $8.5 trillion cash mountain into higher-yielding assets. After people under 40 years old put less than $1 billion in NISA accounts in the first quarter, the government is considering doubling the amount of funds exempted and lowering the age limit to 18 years old from 20.