Building a TIPS ladder on IBKR (Bonds vs Notes)

[Phyneas]

I'm perusing the bond markekplace on IBKR as I'm thinking about building a TIPS ladder directly as opposed to holding 15 years worth of expenses in SCHP as I currently do. I'm trying to learn about it in-case I decide to go ahead and build it myself, and one thing I've come up against already is that IBKR splits the TIPS issuances into two groups, 5/10 years in Notes TIPS, and residual 20 years and new 30 years TIPS in Bond TIPS.

For the purposes of building a TIPS ladder, is there any difference between buying a 20 year TIPS bond expiring in January 2025 vs buying a 10 year TIPS bond expiring in January 2025? I suppose this goes to a more general question about what the best way to build such a ladder would be given 5, 10, and 30 years TIPS are generally the only options available?

[RyeBourbon]

For the purposes of building a TIPS ladder, is there any difference between buying a 20 year TIPS bond expiring in January 2025 vs buying a 10 year TIPS bond expiring in January 2025?

No.

I suggest you use www.tipsladder.com

[Phyneas]

For the purposes of building a TIPS ladder, is there any difference between buying a 20 year TIPS bond expiring in January 2025 vs buying a 10 year TIPS bond expiring in January 2025?

No.

I suggest you use www.tipsladder.com

Thank you for the link.

[Toadvine]

Many on the forum here, including myself, have used #Cruncher's excellent TIPS ladder building spreadsheet. I highly recommend it.

[#Cruncher]

I suggest you use www.tipsladder.com

Many on the forum here, including myself, have used #Cruncher's ... TIPS ladder building spreadsheet.

My post in the New tool for building a TIPS ladder thread, where kaesler introduces the tool RyeBourbon references, compares both approaches. His is much easier to use. Mine is more flexible.

For the purposes of building a TIPS ladder, is there any difference between buying a 20 year TIPS bond expiring in January 2025 vs buying a 10 year TIPS bond expiring in January 2025?

The 2-3/8% TIPS maturing 1/15/2025 was originally issued 7/30/2004 with a term of 20-1/2 years. The 0-1/4% TIPS also maturing 1/15/2025 was originally issued 1/30/2015. Besides the higher coupon, the earlier issued one has a larger index ratio, [1] since it reflects inflation over a longer period. There are four similar pairs of TIPS maturing January 15 in 2026, 2027, 2028, and 2029. They all have the same relationship: the 20-year TIPS issued earlier have a larger coupon and a larger index ratio than the more recently issued 10-year TIPS. Here is a table showing the coupons and the index ratios on 5/22/2023: [2]

Code: Select all

                Maturity    Dated    Idx Ratio
 Coupon  Term     Date       Date      5/22/23 
 2.375%  20.5  1/15/2025  7/15/2004    1.59957 
 2.000%    20  1/15/2026  1/15/2006    1.51914 
 2.375%    20  1/15/2027  1/15/2007    1.49513 
 1.750%    20  1/15/2028  1/15/2008    1.43924
 2.500%    20  1/15/2029  1/15/2009    1.40436

 0.250%    10  1/15/2025  1/15/2015    1.27300 
 0.625%    10  1/15/2026  1/15/2016    1.26894 
 0.375%    10  1/15/2027  1/15/2017    1.24820 
 0.500%    10  1/15/2028  1/15/2018    1.22236 
 0.875%    10  1/15/2029  1/15/2019    1.19411

The different coupons and index ratios affect the number of bonds needed to produce a ladder generating the same annual interest plus principal proceeds in constant dollars. But this is automatically accounted for if you use either kaesler's or my ladder builders. For example, here are two cases of six-year ladders of TIPS maturing each January 15th from 2024 to 2029. The first case uses five 10-year TIPS maturing 2025 - 2029. [3]

Code: Select all

 5/22/2023 base date 
 5/22/2023 quote date            Sum-->     6  142   171,435    3,149   177,332   180,480
  Matures    Coupon    Yield     CUSIP   Mult  Nbr     Cost  Interest Principal     Total
 1/15/2024   0.625%   3.148%   912828B25    1   23    29,303      869    29,721    30,590
 1/15/2025   0.250%   2.299%   912828H45    1   23    28,335      739    29,279    30,018
 1/15/2026   0.625%   1.888%   912828N71    1   23    28,301      611    29,186    29,797
 1/15/2027   0.375%   1.701%   912828V49    1   24    28,592      464    29,957    30,421
 1/15/2028   0.500%   1.579%   9128283R9    1   24    27,976      335    29,337    29,671
 1/15/2029   0.875%   1.505%   9128285W6    1   25    28,928      131    29,853    29,983

And here is the second case that uses 20-year TIPS maturing 2025 - 2029 instead:

Code: Select all

 5/22/2023 base date 
 5/22/2023 quote date            Sum-->     6  116   171,796   11,176   168,585   179,761
  Matures    Coupon    Yield     CUSIP   Mult  Nbr     Cost  Interest Principal     Total
 1/15/2024   0.625%   3.148%   912828B25    1   20    25,481    3,220    25,844    29,064
 1/15/2025   2.375%   2.321%   912810FR4    1   17    27,445    2,816    27,193    30,009
 1/15/2026   2.000%   1.912%   912810FS2    1   19    29,129    2,204    28,864    31,068
 1/15/2027   2.375%   1.727%   912810PS1    1   19    29,292    1,578    28,407    29,986
 1/15/2028   1.750%   1.585%   912810PV4    1   20    29,177      989    28,785    29,774
 1/15/2029   2.500%   1.545%   912810PZ5    1   21    31,271      369    29,492    29,860

Note that the first case using 10-year TIPS produces about the same [4] 30,000 per year of constant dollars as the second case which uses 20-year TIPS. [5] But the 30,000 is comprised of less interest and more principal than is the case with the 20-year TIPS. Also note that the first case using 10-year TIPS requires a larger number of $1,000 face value bonds. This happens because they have both lower coupons and lower index ratios than their 20-year counterparts.

1. See the first two paragraphs in the left sidebar of this help page for an explanation of TIPS index ratios.
2. Index ratios taken from Index Ratios for May 15 - June 1, 2023.
3. Taken from the "ToPaste" sheet of my TIPS Ladder Builder Excel workbook using last Friday's prices from WSJ TIPS Quotes.
4. They don't produce exactly $30,000 each year because brokers only sell TIPS on the secondary market in $1,000 face value increments.
5. Both cases use the same 10-year 0-5/8% TIPS maturing January 2024 since 20-year TIPS only mature January 2025 - 2029.

[Phyneas]

I suggest you use www.tipsladder.com

Many on the forum here, including myself, have used #Cruncher's ... TIPS ladder building spreadsheet.

My post in the New tool for building a TIPS ladder thread, where kaesler introduces the tool RyeBourbon references, compares both approaches. His is much easier to use. Mine is more flexible.

For the purposes of building a TIPS ladder, is there any difference between buying a 20 year TIPS bond expiring in January 2025 vs buying a 10 year TIPS bond expiring in January 2025?

The 2-3/8% TIPS maturing 1/15/2025 was originally issued 7/30/2004 with a term of 20-1/2 years. The 0-1/4% TIPS also maturing 1/15/2025 was originally issued 1/30/2015. Besides the higher coupon, the earlier issued one has a larger index ratio, [1] since it reflects inflation over a longer period. There are four similar pairs of TIPS maturing January 15 in 2026, 2027, 2028, and 2029. They all have the same relationship: the 20-year TIPS issued earlier have a larger coupon and a larger index ratio than the more recently issued 10-year TIPS. Here is a table showing the coupons and the index ratios on 5/22/2023: [2]

Code: Select all

                Maturity    Dated    Idx Ratio
 Coupon  Term     Date       Date      5/22/23 
 2.375%  20.5  1/15/2025  7/15/2004    1.59957 
 2.000%    20  1/15/2026  1/15/2006    1.51914 
 2.375%    20  1/15/2027  1/15/2007    1.49513 
 1.750%    20  1/15/2028  1/15/2008    1.43924
 2.500%    20  1/15/2029  1/15/2009    1.40436

 0.250%    10  1/15/2025  1/15/2015    1.27300 
 0.625%    10  1/15/2026  1/15/2016    1.26894 
 0.375%    10  1/15/2027  1/15/2017    1.24820 
 0.500%    10  1/15/2028  1/15/2018    1.22236 
 0.875%    10  1/15/2029  1/15/2019    1.19411

The different coupons and index ratios affect the number of bonds needed to produce a ladder generating the same annual interest plus principal proceeds in constant dollars. But this is automatically accounted for if you use either kaesler's or my ladder builders. For example, here are two cases of six-year ladders of TIPS maturing each January 15th from 2024 to 2029. The first case uses five 10-year TIPS maturing 2025 - 2029. [3]

Code: Select all

 5/22/2023 base date 
 5/22/2023 quote date            Sum-->     6  142   171,435    3,149   177,332   180,480
  Matures    Coupon    Yield     CUSIP   Mult  Nbr     Cost  Interest Principal     Total
 1/15/2024   0.625%   3.148%   912828B25    1   23    29,303      869    29,721    30,590
 1/15/2025   0.250%   2.299%   912828H45    1   23    28,335      739    29,279    30,018
 1/15/2026   0.625%   1.888%   912828N71    1   23    28,301      611    29,186    29,797
 1/15/2027   0.375%   1.701%   912828V49    1   24    28,592      464    29,957    30,421
 1/15/2028   0.500%   1.579%   9128283R9    1   24    27,976      335    29,337    29,671
 1/15/2029   0.875%   1.505%   9128285W6    1   25    28,928      131    29,853    29,983

And here is the second case that uses 20-year TIPS maturing 2025 - 2029 instead:

Code: Select all

 5/22/2023 base date 
 5/22/2023 quote date            Sum-->     6  116   171,796   11,176   168,585   179,761
  Matures    Coupon    Yield     CUSIP   Mult  Nbr     Cost  Interest Principal     Total
 1/15/2024   0.625%   3.148%   912828B25    1   20    25,481    3,220    25,844    29,064
 1/15/2025   2.375%   2.321%   912810FR4    1   17    27,445    2,816    27,193    30,009
 1/15/2026   2.000%   1.912%   912810FS2    1   19    29,129    2,204    28,864    31,068
 1/15/2027   2.375%   1.727%   912810PS1    1   19    29,292    1,578    28,407    29,986
 1/15/2028   1.750%   1.585%   912810PV4    1   20    29,177      989    28,785    29,774
 1/15/2029   2.500%   1.545%   912810PZ5    1   21    31,271      369    29,492    29,860

Note that the first case using 10-year TIPS produces about the same [4] 30,000 per year of constant dollars as the second case which uses 20-year TIPS. [5] But the 30,000 is comprised of less interest and more principal than is the case with the 20-year TIPS. Also note that the first case using 10-year TIPS requires a larger number of $1,000 face value bonds. This happens because they have both lower coupons and lower index ratios than their 20-year counterparts.

Hi #Cruncher, thank you for answering, I enjoy reading your threads on TIPS and helping to demystify buying bonds directly. I've read through the kaesler thread and I've been working through the tool that he created (as another user above recommended) to become familiar with the process.

In terms of the example you presented, what is the difference between the real return being comprised of more principal vs more interest, is it only a tax consideration, or does it represent a choice on other terms?

You also mention that one option requires buying more individual bonds than another as a distinguishing element, is this because of the fees involved in purchasing individual bonds?

[#Cruncher]

In terms of the example you presented, what is the difference between the real return being comprised of more principal vs more interest, is it only a tax consideration, or does it represent a choice on other terms?

The ladder that uses five 10-year TIPS maturing January 2025-2029 has about the same return (1.75%) as the one that uses five 20-year TIPS (1.76%) maturing on the same dates. [*] You can see the overall returns at the bottom right (cells H25 and H55) of the following two tables that expand on those from my previous post to show the cash flow every six months. First is the table using 10-year low coupon TIPS maturing in 2025-2029. The second table replaces these five with higher coupon 20-year TIPS.

Using five 10-year TIPS Maturing January 2025 - 2029

Code: Select all

                ----------------------- Bond -----------------------
Row      Col A    Col B    Col C    Col D    Col E    Col F    Col G     Col H
  3   Maturity  1/15/24  1/15/25  1/15/26  1/15/27  1/15/28  1/15/29
  4     Coupon   0.625%   0.250%   0.625%   0.375%   0.500%   0.875%
  5      Yield   3.148%   2.299%   1.888%   1.701%   1.579%   1.505%
  6  Idx Princ 1,292.22 1,273.00 1,268.94 1,248.20 1,222.36 1,194.11     Total
  7  Nbr Bonds       23       23       23       24       24       25       142
  8       Cost   29,303   28,335   28,301   28,592   27,976   28,928   171,435
        Date    --------------------- Cash Flow --------------------             Formula in Column B Copied to Column G

Code: Select all

 10  5/22/2023  -29,303  -28,335  -28,301  -28,592  -27,976  -28,928  -171,435  =-B8
 11  7/15/2023       93       37       91       56       73      131       481  =IF($A11<=B$3,B$6*B$7*(B$4/2),0)+IF($A11=B$3,B$6*B$7,0)
 12  1/15/2024   29,814       37       91       56       73      131    30,202   | | |
 13  7/15/2024                37       91       56       73      131       388   | | |
 14  1/15/2025            29,316       91       56       73      131    29,667   | | |
 15  7/15/2025                         91       56       73      131       351   | | |
 16  1/15/2026                     29,277       56       73      131    29,537   | | |
 17  7/15/2026                                  56       73      131       260   | | |
 18  1/15/2027                              30,013       73      131    30,217   | | |
 19  7/15/2027                                           73      131       204   | | |
 20  1/15/2028                                       29,410      131    29,541   | | |
 21  7/15/2028                                                   131       131   v v v
 22  1/15/2029                                                29,983    29,983  =IF($A22<=B$3,B$6*B$7*(B$4/2),0)+IF($A22=B$3,B$6*B$7,0)

Code: Select all

 23  2024-2029   29,814   29,389   29,642   30,350   29,997   31,289   180,480  =SUM(B12:B22)
 24   Net Cash      604    1,091    1,432    1,814    2,094    2,492     9,526  =SUM(B10:B22)
 25       XIRR    3.18%    2.31%    1.89%    1.71%    1.58%    1.51%     1.75%  =XIRR(B10:B22,$A10:$A22)

Using five 20-year TIPS Maturing January 2025 - 2029

Code: Select all

                ----------------------- Bond -----------------------
Row      Col A    Col B    Col C    Col D    Col E    Col F    Col G     Col H
 33   Maturity  1/15/24  1/15/25  1/15/26  1/15/27  1/15/28  1/15/29
 34     Coupon   0.625%   2.375%   2.000%   2.375%   1.750%   2.500%
 35      Yield   3.148%   2.321%   1.912%   1.727%   1.585%   1.545%
 36  Idx Princ 1,292.22 1,599.57 1,519.14 1,495.13 1,439.24 1,404.36     Total
 37  Nbr Bonds       20       17       19       19       20       21       116
 38       Cost   25,481   27,445   29,129   29,292   29,177   31,271   171,796
        Date    --------------------- Cash Flow --------------------             Formula in Column B Copied to Column G

Code: Select all

 40  5/22/2023  -25,481  -27,445  -29,129  -29,292  -29,177  -31,271  -171,796  =-B38
 41  7/15/2023       81      323      289      337      252      369     1,650  =IF($A41<=B$33,B$36*B$37*(B$34/2),0)+IF($A41=B$33,B$36*B$37,0)
 42  1/15/2024   25,925      323      289      337      252      369    27,495   | | |
 43  7/15/2024               323      289      337      252      369     1,569   | | |
 44  1/15/2025            27,516      289      337      252      369    28,762   | | |
 45  7/15/2025                        289      337      252      369     1,246   | | |
 46  1/15/2026                     29,152      337      252      369    30,110   | | |
 47  7/15/2026                                 337      252      369       958   | | |
 48  1/15/2027                              28,745      252      369    29,365   | | |
 49  7/15/2027                                          252      369       621   | | |
 50  1/15/2028                                       29,037      369    29,405   | | |
 51  7/15/2028                                                   369       369   v v v
 52  1/15/2029                                                29,860    29,860  =IF($A52<=B$33,B$36*B$37*(B$34/2),0)+IF($A52=B$33,B$36*B$37,0)

Code: Select all

 53  2024-2029   25,925   28,161   30,307   30,769   31,052   33,547   179,761  =SUM(B42:B52)
 54   Net Cash      525    1,040    1,466    1,814    2,126    2,644     9,615  =SUM(B40:B52)
 55       XIRR    3.18%    2.32%    1.92%    1.73%    1.59%    1.55%     1.76%  =XIRR(B40:B52,$A40:$A52)

Tax treatment is pretty much the same for both ladders. If they are held in a tax deferred retirement account, it makes no difference how much of the proceeds are interest payments. Tax is computed on the total withdrawal and the amount of interest income is irrelevant. If the ladder is held in a taxable account, the tax will be based in part on the amount of interest income. But this includes more than just the actual coupon interest payments. Interest income on a bond also includes the amortization of any purchase price discount (additional income) or purchase price premium (reduction of income).

Since the five 10-year TIPS have yields higher than their coupons, their purchase will be at a discount. Therefore, their interest income will be higher than just the coupon payments as the amortized discount is added to the coupon payments. On the other hand, since the 20-year TIPS generally have yields lower than their coupons, their purchase will be at a premium. Therefore, their interest income will be lower than just the coupon interest as the amortized premium is subtracted from the coupon payments. The best estimate of interest income is a bond's yield-to-maturity. Since the 10 and 20-year TIPS yields for the same maturity year are about the same, their interest income will be about the same.

You also mention that one option requires buying more individual bonds than another as a distinguishing element, is this because of the fees involved in purchasing individual bonds?

No, it's not because of fees or bid/ask spreads in the secondary market. Their lower index ratios are the main reason more bonds are required with the ladder using 10-year TIPS. (Their index ratios are lower since they were issued ten years later than the 20-year bonds and therefore have ten years less of accumulated inflation adjustment.) This means one needs to purchase more $1,000 face value bonds to get the same amount of principal. For example, on 5/22/2023 each $1,000 face value of the 0-1/4% Jan 2026 10-year TIPS has $1,273.00 principal value while the 2-3/8% Jan 2026 20-year TIPS has a $1,599.57 principal value. Therefore one needs 23 of the 10-year ($29,316 = 23 X $1,273.00 + $37 interest) , but only 17 of the 20-year ($27,516 = 17 X $1,599.57 + $323 interest).

* I calculate the 1.75% and 1.76% returns with the Excel XIRR function. Edited 3:35 PM to include a row for the 7/15/2023 interest payments. This is needed for XIRR to properly calculate the returns.

[Phyneas]

In terms of the example you presented, what is the difference between the real return being comprised of more principal vs more interest, is it only a tax consideration, or does it represent a choice on other terms?

The ladder that uses five 10-year TIPS maturing January 2025-2029 has about the same return (1.75%) as the one that uses five 20-year TIPS (1.76%) maturing on the same dates. [*] You can see the overall returns at the bottom right (cells H25 and H55) of the following two tables that expand on those from my previous post to show the cash flow every six months. First is the table using 10-year low coupon TIPS maturing in 2025-2029. The second table replaces these five with higher coupon 20-year TIPS.

Using five 10-year TIPS Maturing January 2025 - 2029

Code: Select all

                ----------------------- Bond -----------------------
Row      Col A    Col B    Col C    Col D    Col E    Col F    Col G     Col H
  3   Maturity  1/15/24  1/15/25  1/15/26  1/15/27  1/15/28  1/15/29
  4     Coupon   0.625%   0.250%   0.625%   0.375%   0.500%   0.875%
  5      Yield   3.148%   2.299%   1.888%   1.701%   1.579%   1.505%
  6  Idx Princ 1,292.22 1,273.00 1,268.94 1,248.20 1,222.36 1,194.11     Total
  7  Nbr Bonds       23       23       23       24       24       25       142
  8       Cost   29,303   28,335   28,301   28,592   27,976   28,928   171,435
        Date    --------------------- Cash Flow --------------------             Formula in Column B Copied to Column G

Code: Select all

 10  5/22/2023  -29,303  -28,335  -28,301  -28,592  -27,976  -28,928  -171,435  =-B8
 11  7/15/2023       93       37       91       56       73      131       481  =IF($A11<=B$3,B$6*B$7*(B$4/2),0)+IF($A11=B$3,B$6*B$7,0)
 12  1/15/2024   29,814       37       91       56       73      131    30,202   | | |
 13  7/15/2024                37       91       56       73      131       388   | | |
 14  1/15/2025            29,316       91       56       73      131    29,667   | | |
 15  7/15/2025                         91       56       73      131       351   | | |
 16  1/15/2026                     29,277       56       73      131    29,537   | | |
 17  7/15/2026                                  56       73      131       260   | | |
 18  1/15/2027                              30,013       73      131    30,217   | | |
 19  7/15/2027                                           73      131       204   | | |
 20  1/15/2028                                       29,410      131    29,541   | | |
 21  7/15/2028                                                   131       131   v v v
 22  1/15/2029                                                29,983    29,983  =IF($A22<=B$3,B$6*B$7*(B$4/2),0)+IF($A22=B$3,B$6*B$7,0)

Code: Select all

 23  2024-2029   29,814   29,389   29,642   30,350   29,997   31,289   180,480  =SUM(B12:B22)
 24   Net Cash      604    1,091    1,432    1,814    2,094    2,492     9,526  =SUM(B10:B22)
 25       XIRR    3.18%    2.31%    1.89%    1.71%    1.58%    1.51%     1.75%  =XIRR(B10:B22,$A10:$A22)

Using five 20-year TIPS Maturing January 2025 - 2029

Code: Select all

                ----------------------- Bond -----------------------
Row      Col A    Col B    Col C    Col D    Col E    Col F    Col G     Col H
 33   Maturity  1/15/24  1/15/25  1/15/26  1/15/27  1/15/28  1/15/29
 34     Coupon   0.625%   2.375%   2.000%   2.375%   1.750%   2.500%
 35      Yield   3.148%   2.321%   1.912%   1.727%   1.585%   1.545%
 36  Idx Princ 1,292.22 1,599.57 1,519.14 1,495.13 1,439.24 1,404.36     Total
 37  Nbr Bonds       20       17       19       19       20       21       116
 38       Cost   25,481   27,445   29,129   29,292   29,177   31,271   171,796
        Date    --------------------- Cash Flow --------------------             Formula in Column B Copied to Column G

Code: Select all

 40  5/22/2023  -25,481  -27,445  -29,129  -29,292  -29,177  -31,271  -171,796  =-B38
 41  7/15/2023       81      323      289      337      252      369     1,650  =IF($A41<=B$33,B$36*B$37*(B$34/2),0)+IF($A41=B$33,B$36*B$37,0)
 42  1/15/2024   25,925      323      289      337      252      369    27,495   | | |
 43  7/15/2024               323      289      337      252      369     1,569   | | |
 44  1/15/2025            27,516      289      337      252      369    28,762   | | |
 45  7/15/2025                        289      337      252      369     1,246   | | |
 46  1/15/2026                     29,152      337      252      369    30,110   | | |
 47  7/15/2026                                 337      252      369       958   | | |
 48  1/15/2027                              28,745      252      369    29,365   | | |
 49  7/15/2027                                          252      369       621   | | |
 50  1/15/2028                                       29,037      369    29,405   | | |
 51  7/15/2028                                                   369       369   v v v
 52  1/15/2029                                                29,860    29,860  =IF($A52<=B$33,B$36*B$37*(B$34/2),0)+IF($A52=B$33,B$36*B$37,0)

Code: Select all

 53  2024-2029   25,925   28,161   30,307   30,769   31,052   33,547   179,761  =SUM(B42:B52)
 54   Net Cash      525    1,040    1,466    1,814    2,126    2,644     9,615  =SUM(B40:B52)
 55       XIRR    3.18%    2.32%    1.92%    1.73%    1.59%    1.55%     1.76%  =XIRR(B40:B52,$A40:$A52)

Tax treatment is pretty much the same for both ladders. If they are held in a tax deferred retirement account, it makes no difference how much of the proceeds are interest payments. Tax is computed on the total withdrawal and the amount of interest income is irrelevant. If the ladder is held in a taxable account, the tax will be based in part on the amount of interest income. But this includes more than just the actual coupon interest payments. Interest income on a bond also includes the amortization of any purchase price discount (additional income) or purchase price premium (reduction of income).

Since the five 10-year TIPS have yields higher than their coupons, their purchase will be at a discount. Therefore, their interest income will be higher than just the coupon payments as the amortized discount is added to the coupon payments. On the other hand, since the 20-year TIPS generally have yields lower than their coupons, their purchase will be at a premium. Therefore, their interest income will be lower than just the coupon interest as the amortized premium is subtracted from the coupon payments. The best estimate of interest income is a bond's yield-to-maturity. Since the 10 and 20-year TIPS yields for the same maturity year are about the same, their interest income will be about the same.

You also mention that one option requires buying more individual bonds than another as a distinguishing element, is this because of the fees involved in purchasing individual bonds?

No, it's not because of fees or bid/ask spreads in the secondary market. Their lower index ratios are the main reason more bonds are required with the ladder using 10-year TIPS. (Their index ratios are lower since they were issued ten years later than the 20-year bonds and therefore have ten years less of accumulated inflation adjustment.) This means one needs to purchase more $1,000 face value bonds to get the same amount of principal. For example, on 5/22/2023 each $1,000 face value of the 0-1/4% Jan 2026 10-year TIPS has $1,273.00 principal value while the 2-3/8% Jan 2026 20-year TIPS has a $1,599.57 principal value. Therefore one needs 23 of the 10-year ($29,316 = 23 X $1,273.00 + $37 interest) , but only 17 of the 20-year ($27,516 = 17 X $1,599.57 + $323 interest).

* I calculate the 1.75% and 1.76% returns with the Excel XIRR function. Edited 3:35 PM to include a row for the 7/15/2023 interest payments. This is needed for XIRR to properly calculate the returns.

Thank you #Cruncher, I've figured out how to buy the TIPS issues on IBKR, and with your help and that of kaesler's tool, I'll finally be able to buy my LMP TIPS ladder. You always put a tonne of effort into your replies, and I'm sure other people have said this, but thank you so much for the contributions you make on here - you've turned something that seemed out of my reach to accomplish into something I could understand and take control of, and I really appreciate it. I'll be taking that SCHP out of my signature now ...