foreign characters and entity problems

i feel like i'm getting nowhere on this ---> i would like to be able to take
characters in that are not english, such as a spanish tilda or whatever and
have it stored in an xml file so that i when i go to transform it or
whatever it doesn't complain about entities or invalid tokens. i try
htmlentities(), it doesn't work. seems to be all kinds of info on this
stuff, but i don't know what is appropriate for xml? I really don't want to
be utf-8 now, i'm thought i can do all this in ISO-8859-1.

what's the answer? how do i get the info into xml files so that it works
right?
any help is apprciated.

thanks,
dave