Either of these will fix the problem that you are having with your type being messed up, which is due to fonts not embedding in .svg files.
'Rasterize type layer' converts your text into pixels. It's no longer scaleable so it will only display crisply at, or below, the size you export it at. As you are exporting from Photoshop anyway, this may be the best option because you would be presumably outputting other raster art in the file as well. However, if that's the case, you might be better served with an ordinary raster image format (.jpg, .png etc) and avoid other unnecessary .svg related headaches altogether.
'Convert to shape' is much the same as the 'create/convert to outlines' option found in most other layout and design tools, where your text is changed into vector shapes, while (hopefully) retaining the detail from the font. Unlike rasterizing, shapes are scalable, so you could display your .svg at any size and the text will remain sharp, without pixellating.
Not really possible to give a recommendation as to which would be best - it really depends on the artwork you're exporting. The question of whether or not the text needs to be scaleable would determine which method (although, if it doesn't need to scale, and .svg isn't a requirement for some other reason, you'd probably be better off with a traditional image format).