Windows 2000, xp office Vista Office, and Vista Ultimate all come with the Encrypting File System (EFS). This file and folder encryption tool integrates seamlessly into the operating system. Nevertheless, I don't recommend it.

EFS makes sense in an office environment. where an IS department manages the PCs. Once set up, it's fully transparent: If users are logged on with their name and password, they can access their encrypted files; otherwise, they can't. But the EFS route can leave your sensitive data vulnerable if you walk away from your PC for a moment. And EFS's easy, transparent design compticates tasks like backing up data securely and recovering files after reinstalling Windows.

That's why I prefer TrueCrypt, a free, open-source program for creating and using multiple encrypted volumes. A TrueCrypt volume looks like a file filled with unreadable gobbledygook. But when you open it in TrueCrypt and enter the password, it becomes a virtual drive on your PC, containing previously inaccessible files.

TrueCrypt has various ways to hide your volumes from view. It can encrypt an entire hard drive or flash drive-even the system drive. And it offers many encryption algorithms. With TrueCrypt and similar programs, your encrypted data remains private and inaccessible until you need it.