Definition of Lock-in Period
A lock-in period is the minimum time you must hold an investment before you are allowed to withdraw or redeem it. Different investment products have different lock-in periods mandated by regulation or the product terms.
Common lock-in periods in India: ELSS (3 years — shortest among Section 80C options), PPF (15 years, with partial withdrawal allowed from year 7), NPS Tier 1 (until age 60), Tax-Free Bonds (10–20 years), and ULIPs (5 years). NFOs sometimes have a 30-day lock-in period.
Lock-in periods protect both the investor (from impulsive withdrawals during market downturns) and the fund (allowing stable, long-term investment of collected money). For FIRE planners, understanding which portions of your corpus have lock-in restrictions is critical — you must maintain sufficient liquid and accessible investments alongside locked-in assets.