Crucial Topic.
Custodial wallet is a type of wallet that requires a third party to takes hold of private keys on behalf of every user.
Which makes asset more secure, because only the third party and the user knows the private key.
In a case where there is missing asset, the private key must have been shared to someone outside the third party and user.
You don't know how a custodial wallet works. You never own the private key in a custodial wallet. It's the third party or your custodial wallet that secures the private key and holds the coins for you. You know it means you don't own the coins but some number in the custodial wallet you use. They can freeze your account, run away with your coins, etc. How come you think a custodial wallet is better? Spend some time learning all these before you invest in cryptocurrencies. Did you know what happen to mtgox, maybe the recent issue with FTX or a lot of issues in the lending platform etc? Have some deep digging on these.
As for Hardware wallet, just misplacing it could put the user at risk, because no third party to help checkmate the security.
You will have your wallet and the seed key. Just make sure you have access to any of these. Write your seed key few times and store them on different places.