1. What is Encryption?
Many amateurs confuse encryption with password protection. This is not true, in password protection, your file doesn't open without a password being entered first. In encryption, the actual text in your file is encrypted, making it illegible to anyone without the key to unlock the encryption.
2. Keep separate copies
Encrypting the only copy of your data is never advisable. For example, if you have a text file that you're going to carry around in a USB thumb drive, then the copy on the thumb drive should be encrypted, while the original copy should be left untouched on your system. This ensures that even if you lose the key, your data can be retrieved easily.
3. Password/Encryption Key
This is what is used in order to undo the encryption that has been placed on your file. If you forget this then most often you're done for. In fact, in most advanced tools there is no way to get back the data if the encryption key or password is lost.
4. Where is data stolen from?
Data is most often stolen from its original source or premises where it is kept in. While this doesn't mean that you shouldn't encrypt data in other places, a thumb drive that will remain on your person all the time is harder to steal from than your computer. You should encrypt data that is going to be in transit and that on the original system.
5. Word files
Encrypting word files is the easiest thing to do. When you're saving a word file, press 'Save As' and choose the Security Options from the Tools Menu. Here you can encrypt your file by choosing a secure password (make sure you choose a strong one) and giving it an RC4 protection.
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