It's probably best to do the local transfer, This way everything that transfer across also stays on the Switch 1 and the Switch 1 won't get wiped during the transfer process. The only save that gets permanently transferred is Animal Crossing New Horizons.
If you do decide to go the route of uploading your data to the cloud and then re-downloading it on the Switch 2, The Switch 1 will get factory reset, so best to do this closer to the time when the Switch 2 releases.