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Do not convert your video! Assuming you've got an adequately powered system, you'll have no problems editing H.264 video in Premiere Elements 11. In fact, unless you really know what you're doing, converting your video can turn it into a format that's actually less rather than more efficient to edit.
What processor do you have? If it rates at least a 5000 on this benchmark page, you'll have no problems editing 1080p.
As for photos, in my books I recommend resizing your photos to no larger than 2500 pixels wide by 1875 pixels tall in order to have a smooth video editing workflow. Larger photos can slow down and even crash the program. But beyond the actual size, you'll get no noticeable boost by converting the photos from JPEGs to PSDs. The compression doesn't signficantly tax the program. It's the actual measurement of the photos, in pixels, that makes the difference.
Thank you very much for taking the time to answer my question - it gives me confidence. I was on the understanding that my video and photos would have to be converted to a non-compressive lossless format so that each time I saved my work it would not loose quality.
I live on a farm in a rural area - contact like this is invaluable.
Again, thank you. Alan
Premiere Elements is non destructive, that means every time you edit or save or export your work the original files wont be touched.
Ann, thank you, I did not know!