Password protecting or encrypting folders and files is a way to prevent your data from being seen by others. Passwords should be strong in order to make it harder for someone to guess them. Documents can be password protected in Microsoft Office 2010. Beyond that, file encryption software (like AxCrypt) will protect files. When protecting files, you must remember your password or your documents will be irretrievably lost.
If your PC crashes, experiences a hard drive failure or becomes infected with a virus, everything stored on it may be lost. Protect yourself by regularly backing up your files.