You can use many comparisons for portfolio performance.
The “risk free” comparisons against cash-like assets.
- 10 year government bond rate.
- Deposit interest rate on cash.
- Term deposit rate.
- SRS rate.
Performance against the market.
- Indices, such as STI or DJI or whichever is more closely related to the mix in your portfolio.
Performance against inflation.
- Personal inflation rate.
- Goverment announced rates.
- Government target rates.
If you are using inflation as the main comparison, then MAS forecast core inflation of 1.5–2.5% in 2019, so using 3% will give you a safety margin, provided your returns are more than the target.
Regarding question 2. Investing in the stockmarket market has its ups and downs. XIRR is calculated on an annualised basis over the period of the cashflows. You cannot add the three years individual XIRR to end up with a total performance. XIRR should be calculated for the whole period, which you can see in the table here.
SC calculates the historic yearly XIRR and the total XIRR, simply adding up the annual figures does not result in the total figure.
Then there are the “dividend hunters” like me, who are more interested in how the dividends perform on a YoY basis, and try not to be too concerned about the absolute portfolio performance. A YoY increase of total dividends paid above inflation and we are happy!
(Although we’d be even happier if there was a capital gain too).