What is the plan with lock-in period (Lock-in Period definition and meaning in hindi)
Today we are going to explain you in detail about the lock-in period through this post of yours. What is lock-in period and how is it enforced? Before knowing about this, let us know, on whom and how is the lock-in period applicable?
The lock in period relates to an investment. You must have heard this saying “Investing in the market is subject to risk” often, but to know it deeply, it is very important to know all the things related to it.
Investment what is the market?
Market is a place where money is invested by big companies or by some small traders. In return for that investment, he takes some shares of the companies in his name or buys those shares for a limited time period.
All these investments are subject to risks, by this we mean that any time the market goes down, the value of your shares decreases, and when there is some increase in the market, the value of your shares automatically increases.
Now Let’s talk about lock in period….
lock What are these periods (Lock-in Period meaning)
If the lock-in period is defined in the right words, then it would mean that a limited amount of money is logged in for a long time, comes under the lock-in period. In the investment market, you can invest your money for a long time according to various schemes and also tie it in a lock-in period. It has some disadvantages as well, so there are advantages as well.
The lock-in period can also be from 30 to 60 days and if we talk about the long-term lock in period, then it ranges from 3 to 5 years.
- The amount invested is tied for a limited time period. If the investor is under the lock-in period, he can neither exit nor sell any asset prematurely.
- This lock in period is also applicable to the loan holders. According to this the loan holder cannot repay the loan prematurely without paying the penalty of borrowing.
lock Lock-in Period advantage and disadvantage
There are many schemes in this, from which the common man has to compensate for the loss along with the facilities. Let’s take a look at them too….
Plans for children and retirement plans are included under the lock-in period. These plans are logged for about 5 years. The biggest problem for the consumers remains that whether they should show their interest in these plans or not.
retirement Retirement Plan
As per the lock-in period, the tenure of the retirement plan completely depends on the retirement. If you have less than 5 years left in your retirement, your lock in period will end soon.
If experts are to be believed, they are opposed to investing according to the lock-in period. If experts are to be believed, then according to them investing in common equity or balanced schemes is more beneficial.
Experts say that it is not right to invest continuously for 5 years through lockin. But if viewed from a positive point of view, it will bring a discipline in investing and a certain amount will be locked for a stipulated time.
let’s find out ELSS How does the scheme work during the lock-in period?
Do not hurry to exit ELSS scheme.
The tenure of ELSS scheme is 3 years. Although exiting from this scheme 3 years before may prove to be a loss, but if the benchmark has performed much worse than the stipulated performance, then you can transfer the investment to other open ended equities.
According to experts, investing in mutual equity funds for a long period of time is beneficial. By long we mean at least 7 years. If you want to invest for a short time period like 2 or 3 years, then avoid mutual equity funds. If you invest in it for 7 years or more, then it will prove beneficial for you.
Sometimes investors also do this by withdrawing money from equity funds during the time period of 3 years and thinking of investing in a new ELSS scheme. This will not bring any benefit to them as it does not increase the amount invested.
Withdraw money only when needed
If you have invested in equity funds, then keep in mind that you try to withdraw money only at the time of your financial need. You can use the invested amount only during an emergency situation like health deteriorating or need of something in the family which will be better for you.
Keep in mind that this amount has a lock-in period only for 3 years, after which it gets converted into an open-ended scheme. After 3 years, you can withdraw money from the ELSS scheme at any time, in which you do not have to pay tax.
easy way to avoid tax
According to experts, ELSS scheme is an easy way to avoid tax. There are 2 benefits of this scheme which are very much liked by the investor.
- Money can be invested in this for a long period of time. Which remains in lock-in period for 3 years, after that it becomes open ended.
- This is a very good tax saving investment scheme. If an investment wants to avoid dying of tarak tax, then he can adopt this scheme.
Experts have to say about this that high business investors should invest at least one and a half lakh rupees in this scheme. They say that if you want to benefit from tax, then under section 80C, you get the provision of exemption from tax on the amount of 1.5 lakh only.