What is lock-in period? In simple terms, a lock-in period is the time duration for which you are not allowed to sell or withdraw an investment.
Investments like mutual funds, hedge funds, IPOs, etc., typically have a lock-in period, which varies with different investments and providers. It is essential not to confuse the lock-in period of an investment with the tenure of an investment.
Let’s understand the lock-in period meaning more closely.
Say you invest in a mutual fund scheme that has a lock-in period of 3 years, such as ELSS (Equity Linked Saving Scheme). During this period, you are not allowed to sell or redeem the units.