I encrypt my MBP as it travels with me on occasion. I don't notice any real speed differences with my 2012 fitted with an internal SSD and using 16GB of RAM.
If that was my older iMac, I'd do the internal disk swap with a good sized SSD, 1TB or more. You can also add an SSD, but it is a much more complicated procedure, and requires a kit if your iMac didn't come with internal SSD. Check out the video tutorials at OWC. I've never been inside an iMac, but almost every other Mac. The only way to boot externally without severe loss of speed is Thunderbolt, which requires expensive cables and enclosures. With USB3, you go to 1/2 speed of the SSD, and with USB2 or FW, forget about it. That depends on the model year. TB started with the 2011 models and USB3 began with 2012. So pre 2011 models are a no brainer for internal drive replacement. This will give new life to an old iMac.