Warren Buffett is a smart investor, with plenty of smart tips for investors to follow. But even though Buffett has said that cash is a bad investment, its value right now is a lot higher than he might give it credit for having.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, talks about the value of cash in today's market. On one hand, Dan notes that while having some money in stocks makes sense, having all of your money invested can be riskier than is prudent. Even conservative investments Vanguard Dividend Appreciation (NYSEMKT:VIG) or Buffett-owned dividend stocks Coca-Cola (NYSE:KO) and Procter & Gamble (NYSE:PG) sport above-average valuations right now, introducing risk that threatens their margin of safety. Dan also points out that bond investments iShares 20+ Year Treasury (NYSEMKT:TLT) and Vanguard Total Bond (NYSEMKT:BND) carry risk of principal loss, something that can overwhelm their relatively weak yields right now. In that light, Dan concludes that holding cash right now isn't a bad move, even with the certain loss of purchasing power that will result at current rates.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and Procter & Gamble and owns shares of Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.