What is meant by a Lock-in period

The lock-in period is a restriction period during which an investor cannot sell or redeem their investment in a mutual fund or stock. The purpose of a lock-in period is to ensure that investors hold their investments for a specific duration of time, thereby promoting long-term investing and reducing volatility caused by frequent buying and selling.

In mutual funds, a lock-in period can apply to specific types of funds, such as tax-saving funds or equity-linked savings schemes (ELSS). These funds usually have a lock-in period of 3 years, during which investors cannot redeem or sell their units. This lock-in period also helps investors to avail tax benefits. 

In stocks, the lock-in period usually applies to initial public offerings (IPOs) or shares issued to employees under employee stock ownership plans (ESOPs). In the case of IPOs, a lock-in period can range from 3 to 5 years for promoters and other key personnel, during which they cannot sell their shares in the market. In the case of ESOPs, employees may be subject to a lock-in period ranging from 1 to 4 years, during which they cannot sell their shares.

It's important to note that lock-in periods may vary depending on the specific fund or stock. Investors should carefully read the offer documents or prospectus to understand the lock-in period and other restrictions, if any, before making any investment decisions.