Necessary Read Frequency vs PPR of Rotary Encoder
Is this rotary encoder one with quadrature outputs?

Is this one connected to a fast motor or one that a user turns a simple knob?

If this is a quadrature encoder connected to a fast device please give up the idea of monitoring the encoder directly by sampling a couple of GPIO pins via a timer interrupt. Instead use an MCU that has timer/counter hardware specifically designed to capture and decode the quadrature waveforms. 

On the other hand if the encoder is one of these low resolution user interface devices with a PPR count of say less than a hundred or so then it is feasible to design a timer driven interrupt sampling system that can monitor the quadrature inputs on a pair of port pins. Keep in mind that the these low cost types of rotary encoders often use wiper contacts inside that will require de-bouncing similar to regular switch contacts. This will eat into the maximum speed with which you can decode and count the quadrature pulses. 

I have been successful with using a 1msec timer interrupt state machine to decode decode user interface encoders with 32 and 64 PPR including debouncing. Of course if it is a non-detented freely rotated device it may still be possible to get the quadrature signals coming in faster than a 1KHz interrupt can keep up if the user happened to give the knob or shaft a very fast spin.