Sharepoint permissions at the folder level

I have a request to allow 3 people to view a single folder of documents only on a site with sensitive documents.  I go to the folder and click manage permissions - I notice that there is no option to create a new group of permissions, however I can at the site level.  Should I grant users permissions directly?  Wondering what the best way of doing this would be.  All parts of the site inherit permissions from parent.
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PurpleSladeAsked:
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QPRCommented:
When you say a single folder, do you mean a folder within a doc library or the library itself?
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dp_expertCommented:
Generaly it is advised to use groups instead of direct permissions to users. It is much easier to manage.
Groups are created on site collection level but groups do not need to have any permissions assigned to the site/site collection.

So the best practise is:
- create a group and name it according to the role this group will represent - eg. Approvers of annual bugdet or Managers of project X or viewers of confidential financial documents. The group name is realy important because it allows you to define and recognise what is the essence of membership in this group.
- do not assign permission for this group to a site unless it's necessary.
- assign people to the group
- go to list or folder and set permissions
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PurpleSladeAuthor Commented:
Thanks for the replies.  I think I am confused on how to create a permissions group not at the site level.  The way I have been doing it is through site actions -> site permissions but that associates the group with that site, correct?
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QPRCommented:
Yes if that site has unique permissions if not you will see a link to "manage parent" which you click and create your group there.
If your site has unique permissions then your group is created at that site level
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PurpleSladeAuthor Commented:
Thanks so much - that clarified things for me a lot.  I kept thinking that you needed to assign the level of permissions to the group when you create it at the site level.  It didn't occur to me that you just create a group, assign no permissions and then add the group where you need and THEN define the permissions.
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