One of the questions that have recently passed my mind is how far do you really have to go with encryption. After listening to Steve Gibson at twit.tv for almost a year now, I've heard him talk a good deal about encryption. But what is enough?
The amount of encryption you should use it directly proportional to the value of the most valuable data in the folder/drive.
I've developed this theory after using a program called TrueCrypt. It allows you to basically create a container, similar to a .zip folder, that you can mount like a hard drive. But what is really cool about it is that the file looks like a regular file, so if someone is just glancing through your files, they really would never be able to tell the difference. And if you have to work with others, but have you encrypted files open, the container looks just like another hard drive on 'My Computer', giving them no reason to be suspicious of anything. You can also encrypt whole USB Drives or even entire partitions. One of the features I find handy is the ability to set hotkeys, and most of the keys are things that would be really useful if someone is coming to look over your shoulder. I currently have the a key (Ctrl + Alt +Backspace) bound to automatically dismounting all the drives and exiting TrueCrypt. That way if anyone is coming over, they would never know that I am working with encrypted file, or where they are.
But getting back to my theory. TrueCrypt allows you to create layers of encryption that if you have something extremely important, you can bury it upon several encryption algorithms and passwords. Plus the fact that you can require that along with the password, a keyfile is given. This is a file that about the first 1,000 bytes of are used along with the password to encrypt your container.
So, if you have some of the sensitive information lying around on a laptop, you might want to bolt it up tight with TrueCrypt or another popular encryption techniques.