Lock-In Period
InvestmentsA lock-in period is the mandatory holding time during which investments cannot be redeemed or transferred. Different instruments have different lock-in periods -- ELSS (3 years), PPF (partial lock-in 7 years), tax-saver FD (5 years), NSC (5 years). Lock-in protects tax-saving benefit.
In detail
Common lock-in periods:nELSS mutual funds: 3 years per installment (each SIP installment locked separately)nPPF: full withdrawal only at 15 years; partial withdrawal from year 7nTax-saver FD (80C): 5 years, cannot break earlynNSC: 5 yearsnNPS Tier I: locked until age 60 (partial withdrawal after 3 years)nULIP: 5 yearsnnSIP in ELSS: each monthly installment has its own 3-year lock-in from the date of that investment. Rs 5,000 invested in January 2022 is unlocked in January 2025. The February 2022 installment unlocks February 2025.
Real-life example
Sneha invests Rs 10,000/month ELSS SIP from April 2022. She needs to redeem in April 2025. Only the April 2022 installment is unlocked (3 years). May 2022 through March 2025 installments are still locked. She can only redeem the first installment (Rs 10,000 + gains). Each month, one more installment unlocks.