There are technically 2 types of wallets, hot wallets and cold wallets. A hot wallet is your common online wallet. You use this wallet to keep active cryptos you would like to trade or use. For security reasons, you should store your non-active cryptos in your cold wallet. A cold wallet is disconnected from the internet and acts like a thumb drive to store your cryptos that way you can be 100% sure hackers can’t access your cryptos. As you can see from the recent FTX scandal.
Right now the best option I like is Binance and Trezor as my cold wallet.
The simplest description of a cold wallet is a wallet that is not
connected to the internet and therefore stands a far lesser
risk of being compromised. These wallets can also be
referred to as offline wallets or hardware wallets.
Example of a hardware wallet.
Perhaps the most interesting question is what is actually stored inside your wallet.
Cryptocurrencies are never stored within the wallet itself, they live on the blockchain. The hardware wallet merely stores your private key. That private key opens the lock to your address on the blockchain where your assets actually live.