Dollar Cost Averaging is a well known investing technique that involves investing a constant amount of money each month, quarter or year. The advantage of the technique is that the investor buys more shares when stocks are cheap and fewer shares when prices are high. While the technique can be used with any investment, it is most commonly used when investing in mutual funds. The disadvantage to using dollar cost averaging when investing in stocks is that transaction costs, as a percentage of the periodic investment, can be relatively high.