Speaking from personal experience, I have two Tiller Money spreadsheets I use all the time. One if for our family, and in that one I keep a list of transactions that is many years long. I keep that sheet running fast with 17,000 transactions by keeping processor intensive reports to a minimum. For example, I don’t let extra pivot tables sit around collecting dust if I’m not using them.
In the other spreadsheet we use to manage the finances for Tiller Money the company, each spring (a few months into the new year) we make a duplicate spreadsheet, for example called “2019 Archive”, and use that to store last year’s data. Then in the live spreadsheet we prune prior year data. That keeps it small and fast.
Two approaches, both work.