I am thinking of installing free encryption software on my Macbook 10.6.2 that offers to encrypt the entire hard drive. Am I asking for problems or will this simplify my life? Will it add a significant layer to my internet security? After all, the important web sites that control my access to money all appear to be themselves encrypted. Do I really need this?

You don't need to encrypt your entire disk, just those files that contain sensitive information you wouldn't want others to have ready access to. This condition might be met whenever others can somehow gain access to your Mac, either while it's in your possession or after it's stolen.

Btw, you already have such an encryption option built into your OS: FileVault was introduced in Tiger and encrypts your Home folder. Alternative options include encrypted disk images, the contents of which can be customized at will.

Minor correction... FileVault was introduced no later than with OS X 10.3, Panther. (Ref: Mac OS X 10.3, 10.4: FileVault - How to verify or repair a home directory image )

Encrypting your entire hard drive will not help protect you against things like phishing attacks and computer viruses. In a phishing attack, you are tricked into going to a phony bank site and typing in your bank account and password. Viruses can read files from your computer when you are using it, should you be infected (which you aren't likely to be as you're on a Mac).

The purpose of encryption software is to secure the data on your hard drive in case your computer or the hard drive in it is stolen. It's something that is really only necessary if oyu keep sensitive government, military, medical, or corporate information on your computer which is likely to make it a target of thieves.

The disadvantages of hard drive encryption are: it can slow your computer down (higher levels of encryption mean greater slowdown), it can make recovering your data in the event of a hard drive crash difficult or impossible, and if you should forget your password you'll be totally buggered.

Thanks to all for replies.
I don't have anything important on my computer except the usual ids and passwords, the stealing of which could be troublesome.
I was really thinking of the need to encrypt messages between myself and others, individuals or websites, but that wouldn't require encrypting the entire disk, would it?

Encrypting messages would not require encrypting any of your hard drive. You can use separate software (see Version Tracker search) for examples. GPGMail is a free, commonly used one.

To protect your ID's and passwords, consider some sort of password protection software that stores your data in an encrypted format that uses a password that can be encrypted.

Thanks a lot, Ira.
Over and out.

The smallest level of proper security is to use disk utility to make a small encrypted disk image, say 100mb, and store your passwords in a text file saved only on that disk image. It's also a good place to store other information you may need later. For example I keep a copy of all my credit card numbers, their phone numbers, etc., and anything else I may need to cancel if lost. PIN numbers, bank account numbers, etc. They're all safe inside an encrypted disk image and can come in very handy later.

A friend of mine lost his wallet and had a heck of a time accounting for everything in it to get it cancelled.

It's also a good place to store your checkbook ledger.

The following MacWorld article may be of interest in this context: Protect data with encrypted hard drives