The golden rule pertaining to your data involves carrying out steps to backup and encrypt all your files.
If it wasn’t for backup, all your files be it audio, video, documents and spreadsheets and so on and so forth would be gone in no time from your hard drive.
Also, if your hard drive fell into the wrong hands, they’d have access to all your sensitive (and personal) information which could result in identity theft among other disasters.
Simply put, the best case scenario is to not only backup your files but encrypt the sensitive files in the same hard drive.
While some commercial backup programs come with an option to encrypt files, it doesn’t seem to make sense to some experts to encrypt their backup files.
For the simple reason that if you are worried about people reading sensitive information off your external drive then you should also worry about them being able to access this information from your PC if it’s stole.
So, it should be obvious that you should encrypt your files on your internal drive and which will be encrypted when backed up.
Also, there’s no point in encrypting everything. Well, a thief won’t be able to do much with your vacation pictures either. Of course, legal documents, bank statement or even tax forms are important.
It is for this reason that one should consider trying an open source program such as TrueCrypt but only as a volume in a place that is a part of your regular backup routine (like My Documents) instead of a separate partition itself.