From a human point of view it's a good solution; what you can't see, you don't know you want.
Encrypting a folder can have the opposite effect. The folder is visible and if access is attempted, the need to enter a password positively shouts the message that someone is trying to hide something.
This probably explains why there are so many commercial utilities that claim they can securely hide folders.
I use the word "claim" deliberately. It's actually quite difficult to securely hide a folder in Windows without risking creating problems in the operating system itself.
And there can be all sorts of practical problems. For example, what happens to the hidden folder when you delete a visible folder above it in the folder tree? Will the hidden folder be backed up? Will it be scanned by your AV program? Can the files in the folder be recovered in an emergency such as a system crash?
These are not theoretical problems; they are real and need to be seriously considered.
I've used a number of commercial folder hiding programs over the years and have ended up un-installing them all. They were simply not worth the trouble.
Instead of using complicated and expensive security utilities, I suggest you stealth your folders using a far simpler method using the Windows "hidden" attribute. And once you have hidden your folders you can then protect them using free open source encryption programs.
The Windows hidden attribute works similarly to the more familiar "read only" attribute. It's a property of every file and folder that can be turned on or off. Let's try it.
Create a folder in My Documents and call it "test." Now copy a couple of unimportant files to the folder.
To turn on the hidden attribute right click on the folder icon, select Properties, then the General Tab and check the Hidden box.
The folder should disappear from My Documents. If it doesn't then you have Windows Explorer configured to display hidden files.
To change this, select Tools / Folder options / View then check the "Do not show hidden files and folders" box. Now the test folder should disappear. To make it re-appear select the "Show hidden files and folders" option.
So now you have a way of hiding a folder and revealing it again using your folder settings. Now I'll show you a simple trick that allows you access your hidden folder without constantly changing the folder settings. However, before I can demonstrate this we have to make the folder hidden but the files within it not-hidden.
Go to My Documents and make sure your folder "test" is visible. Open "test" and select all the files by using Control A. Now right click anywhere on the selected files and select Properties / General and uncheck the Hidden attribute. Now your folder is hidden but the files are not.
Go back to My Documents and hide the folder by changing the folder settings. Your test folder should disappear from My Documents.
Now here's the trick. Windows allows you to navigate to a hidden folder. So while in the My Documents folder, type into the address bar "\test" immediately after "My Documents" with no spaces between and hit enter.
Voila you are now in your secret "test" folder and all your documents are visible!
Of course locating your private folder in My Documents is not a great idea as it will be immediately revealed should another user enable the display of hidden files. Better to stash your folder in some obscure location well away from prying eyes but easy to navigate to. Additionally, name the folder to be as uninteresting as possible.
Hiding your folder like this is fine if you only want to keep information from prying eyes but if you really want to properly protect your hidden folder you should encrypt it.
Luckily that's easy; simply use the free open source program AxCrypt:
http://axcrypt.axantum.com/
Using AxCrypt is dead simple so I won't explain how. AxCrypt is also near-unbreakable so make sure you don't forget your password. If you do, your data is lost forever.
Using this technique you can hide and protect your folders without spending a cent and, unlike commercial folder hiding utilities, this technique is not going to potentially create a whole set of other problems.
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