It all depends on which software and motion control vendor you are going to use. Some software (Mach3) only uses/reads one signal per revolution so all you need is a disk with one slot while others will read many signals/pulses per revolution.
7xCNC - Minilathe CNC :: Spindle Encoder
A simple photo interupter will give you an accurate spindle speed and the ability to cut threads.
https://www.robotshop.com/en/wavesha...RoCbwUQAvD_BwE