You should tell us what OS you are using, because it could change what drives you can use.
1. if the speed/spec is better via Thunderbolt (over USB) for this scenario/iMac
I have the Late 2012 iMac, and it is still my main Mac and going strong. I have used plenty of various options of external drives on my Late 2012, along with many other Macs.
I suggest going with an external boot drive, as most of the external options will be faster than your 8 year old internal blade SSD.
You have plenty of external options with the Late 2012 iMac, all have pros and cons. I will post some of the more common options, but leave some out, such as using the SD card slot and a high speed SD card. While it could be about as fast as your internal SSD, the cost per GB makes it not an ideal option compared to others.
You could also set up your own Fusion Drive using your internal SSD and external HDD or external SSD, but with your internal SSD being so old and probably not as fast as it used to be and pretty slow even when new (relative to newer Macs), this might not be the best option for you. So, I won't really get into this.
Here are some External options with estimated cost per GB on 1TB storage, and speeds are based on using it on a Late 2012 iMac, as the speeds could be faster on a newer Mac. The links given are just examples of what you might want/need to get with a particular option.
USB3 with SATA or PCIe SSD - @ $0.10 per GB, About 400MBps, bus powered, but no TRIM support...
This option is the cheapest and easy to set up. Give you a decent speed. I recommend just getting an internal 2.5" SSD such as the Samsung 860 EVO and using a cheap USB3 SATA enclosure SATA/USB3 adapter. With sales, you can get a 1TB 860 EVO and a cheap enclosure for less than $100 if in the US. You can get a drive already put together, like the Samsung T5 or T7, but they tend to be more expensive. The biggest downside to the USB option is the lack of TRIM if using MacOS.
@$100:
Shop Samsung 860 EVO 1TB Internal SATA 2.5" Solid State Drive at Best Buy. Find low everyday prices and buy online for delivery or in-store pick-up. Price Match Guarantee.
www.bestbuy.com
@$8:
SABRENT 2.5 Inch SATA to USB 3.0 Tool Free Clear External Hard Drive Enclosure [Optimized for SSD, Supports UASP SATA III] (EC-OCUB)
www.amazon.com
TB1 with SATA SSD - @ $0.15+ per GB, About 400MBps, bus powered, TRIM support, but harder to find...
This option could be a cheap option for price, but it will take some looking around and most likely would require buying used. One ebay, I have purchased some used LaCie Rugged TB Drives that had HDDs in them and replaced the HDDs with SATA SSDs. It only took about 1 minute, and they work great. This option would be at least $50 more than the USB3 option. You could use any SATA 2.5" SSD in them, such as the Samsung 860 Evo. Most likely the cheapest external option with TRIM support.
@$100:
Shop Samsung 860 EVO 1TB Internal SATA 2.5" Solid State Drive at Best Buy. Find low everyday prices and buy online for delivery or in-store pick-up. Price Match Guarantee.
www.bestbuy.com
@$80:
Find many great new & used options and get the best deals for LaCie Rugged 1 TB Thunderbolt and USB 3.0 Portable Hard Drive 5400 RPM LRD0TU1 at the best online prices at eBay! Free shipping for many products!
www.ebay.com
TB1/2 with AHCI SSD - @ $0.40 per GB, About 700MBps, bus powered, TRIM support, but limited options...
This option is faster, but more expensive than USB3. Harder to find, and only a few options. Limited MacOS options as well (What MacOS version do you use?).
@$370:
Transcend JetDrive 825 Thunderbolt PCIe portable SSD combines a JetDrive 820 PCIe SSD with a sleek aluminum Thunderbolt enclosure to instantly revitalize your Thunderbolt-equipped MacBook Pro, MacBook Air, Mac mini, or Mac Pro!
www.amazon.com
TB1/2 with NVMe SSD - @ $0.45 per GB, About 750MBps, bus powered, TRIM support, but limited options...
This option is similar to the PCIe AHCI SSD option. Just a little faster, and a little more expensive. If you ever decide to get a newer Mac, the speed potential of this drive would increase to about 900MBps, but will be limited to about 750MBps over your Late 2012 iMac's TB1 port. Limited MacOS options as well.
@$402:
Transcend JetDrive 855 Thunderbolt PCIe portable SSD combines a JetDrive 850 PCIe SSD with a sleek aluminum Thunderbolt enclosure to instantly revitalize your Thunderbolt-equipped MacBook Pro, MacBook Air, Mac mini, or Mac Pro!
www.amazon.com
TB3 with NVMe SSD - @ $0.60+ per GB, About 900MBps, TRIM support, but NOT bus powered....
This option is the fastest external option, and probably the fastest option internal or external for your iMac without getting into striping RAIDs. It is also very expensive as you will need extra equipment and cable adapters. The drive itself cost similar to the last option, but the extra equipment could add an additional $150-$200 or more to the cost. If you decide to get a newer Mac, the speed potential could be as high as 3000MBps, but limited to about 900MBps over TB1. Limited MacOS options as well.
@$400:
Samsung Portable SSD X5 is a revolutionary external storage with integrated cutting-edge NVMe and Thunderbolt 3 technologies. The X5 is designed for content creators and high-tech professionals who need fast and secure access to data in a lightweight and compact storage solution.
www.amazon.com
@$170:
TB3DK14PSG (*) OWC 14-Port Thunderbolt Dock with Cable - Space Gray. 14 ports of connectivity: TB3 + USB 3.2 + microSD + SD + mDP + GbE + S/PDIF. *Used, OWC Tested - Non-Functional Audio In/Out Port*
eshop.macsales.com
@$50:
Apple Store Search Results
www.apple.com
@$30:
Apple Thunderbolt Cable lets you conduct fast data transfers by connecting Thunderbolt-enabled devices to your Mac. Get fast, free shipping.
www.apple.com