Hot wallets store private keys on systems connected to the internet, which makes them susceptible to online attacks. Keeping your crypto on an exchange means you have no true ownership or control over it. If the exchange files for bankruptcy or pauses withdrawals, you lose access to your funds.
Hardware wallets store your private keys offline, giving you full control and enhanced security. Even if you misplace or lose your hardware wallet, you can get a new one and use your Secret Recovery Phrase to access your assets.