Suppose I hold lot of bitcoins in exchanges and in some wallet. To prevent the loss of bitcoins, how should one manage them?
Generate multiple new addresses. Distribute the bitcoins among these addresses. Copy the private keys of these addresses to paper wallet.
Is this the way to do it?
What are other better ways to manage large number of bitcoins?
If you want a cold storage then go for paper wallet with encrypted private key. That is the most secure way to store bitcoin regardless of the amount. However, if you are a frequent trader and need your bitcoins to be moved very frequently, then try some light wallet like electrum which has a feature of making multiple transactions at once by paying a single transaction fees.
However, don't forget to diversify your bitcoins in more than one wallets. Try few online wallets like blockchain and coinbase and hold a minor percentage of your bitcoins there for transactions on the go. Choose a mix of wallets to store your bitcoins so that you don't have to worry much about being hacked. You will always have some financial backup.