I am considering moving my default documents folder to Dropbox. These also contain scanned letters and important information relating to contracts, bills, and so on. I will encrypt those with True Crypt.
Are there any other security implications I need to take into account? If my Dropbox is compromised then how secure will the Documents encrypted be (providing they don't know the password)? Are they safe, is there anything I could do to further increase their security?
I heard that TrueCrypt can have both a password and a 'key file'. Both would be required to unlock the store. I could keep this file on my computer, and on a portable key, and not on Dropbox. Is this possible? I Imagine it would massively increase the security..
Basically: What should I take into account when encrypting my documents, what settings, should I use a eye file, how secure is the encryption should my Dropbox be compromised?